Average Real Hourly Wage Growth in 2014 Was No Better Than 2013
The Bureau of Labor Statistics released the Consumer Price Index for December 2014 today, which lets us look at trends in real (inflation-adjusted) wages over the year. In the aftermath of the Great Recession, the U.S. economy has seen very little real wage growth. Real hourly wage growth fell 1.0 percent in 2011, and then 0.1 percent in 2012. Over the last two years, real wage growth has been positive, but slow: real wages rose 0.5 percent in 2013 and 0.4 percent in 2014. Even with the drop in inflation over the last couple of months, average wages increased in 2014 slightly less than in 2013. This means that, by definition, there has been no acceleration in wage growth. Decent wage growth would look like inflation plus productivity growth (around 1.5 to 2.0 percent). Given this, it is clear that the Federal Reserve should not take action to slow the economy down.
Our nominal wage tracker shows just how much wage growth has been falling short of reasonable targets. The labor market and the economy could withstand even higher wage growth because labor’s share of corporate sector income yet to rise in this recovery, and profits are still at record highs. Therefore, real wage growth can be accomplished without putting pressure on prices.
Turning to monthly wages, the figure below shows real average hourly earnings of all private employees (top line) and production/nonsupervisory workers (bottom line) since the recession began in December 2007. For both series, you can see that real wages fell during the recession, then jumped up in late 2008, in direct response to a drop in inflation. When inflation falls and nominal wages hold steady, the mathematical result is a rise in inflation-adjusted wages. After the deflation leading up to 2009 stopped boosting real wages, wage growth has been flat.
Real average hourly earnings, December 2007–December 2014
| All Private Employees | Production/Nonsupervisory Workers | |
|---|---|---|
| 2007-12-01 | $23.69 | $19.77 |
| 2008-01-01 | $23.64 | $19.76 |
| 2008-02-01 | $23.66 | $19.76 |
| 2008-03-01 | $23.68 | $19.77 |
| 2008-04-01 | $23.64 | $19.78 |
| 2008-05-01 | $23.61 | $19.73 |
| 2008-06-01 | $23.42 | $19.59 |
| 2008-07-01 | $23.33 | $19.53 |
| 2008-08-01 | $23.47 | $19.63 |
| 2008-09-01 | $23.48 | $19.65 |
| 2008-10-01 | $23.74 | $19.89 |
| 2008-11-01 | $24.29 | $20.30 |
| 2008-12-01 | $24.56 | $20.54 |
| 2009-01-01 | $24.50 | $20.51 |
| 2009-02-01 | $24.47 | $20.47 |
| 2009-03-01 | $24.53 | $20.56 |
| 2009-04-01 | $24.56 | $20.56 |
| 2009-05-01 | $24.53 | $20.55 |
| 2009-06-01 | $24.36 | $20.42 |
| 2009-07-01 | $24.41 | $20.46 |
| 2009-08-01 | $24.41 | $20.46 |
| 2009-09-01 | $24.36 | $20.47 |
| 2009-10-01 | $24.35 | $20.45 |
| 2009-11-01 | $24.33 | $20.45 |
| 2009-12-01 | $24.32 | $20.47 |
| 2010-01-01 | $24.35 | $20.51 |
| 2010-02-01 | $24.39 | $20.55 |
| 2010-03-01 | $24.41 | $20.55 |
| 2010-04-01 | $24.46 | $20.61 |
| 2010-05-01 | $24.50 | $20.67 |
| 2010-06-01 | $24.49 | $20.68 |
| 2010-07-01 | $24.52 | $20.68 |
| 2010-08-01 | $24.52 | $20.70 |
| 2010-09-01 | $24.53 | $20.69 |
| 2010-10-01 | $24.52 | $20.73 |
| 2010-11-01 | $24.47 | $20.68 |
| 2010-12-01 | $24.39 | $20.59 |
| 2011-01-01 | $24.42 | $20.63 |
| 2011-02-01 | $24.33 | $20.55 |
| 2011-03-01 | $24.22 | $20.45 |
| 2011-04-01 | $24.18 | $20.42 |
| 2011-05-01 | $24.17 | $20.40 |
| 2011-06-01 | $24.15 | $20.38 |
| 2011-07-01 | $24.19 | $20.40 |
| 2011-08-01 | $24.10 | $20.35 |
| 2011-09-01 | $24.08 | $20.32 |
| 2011-10-01 | $24.19 | $20.36 |
| 2011-11-01 | $24.13 | $20.36 |
| 2011-12-01 | $24.14 | $20.35 |
| 2012-01-01 | $24.12 | $20.31 |
| 2012-02-01 | $24.11 | $20.28 |
| 2012-03-01 | $24.10 | $20.27 |
| 2012-04-01 | $24.14 | $20.32 |
| 2012-05-01 | $24.18 | $20.34 |
| 2012-06-01 | $24.21 | $20.34 |
| 2012-07-01 | $24.28 | $20.40 |
| 2012-08-01 | $24.14 | $20.28 |
| 2012-09-01 | $24.09 | $20.20 |
| 2012-10-01 | $24.02 | $20.19 |
| 2012-11-01 | $24.16 | $20.29 |
| 2012-12-01 | $24.22 | $20.32 |
| 2013-01-01 | $24.25 | $20.37 |
| 2013-02-01 | $24.15 | $20.31 |
| 2013-03-01 | $24.23 | $20.37 |
| 2013-04-01 | $24.32 | $20.42 |
| 2013-05-01 | $24.30 | $20.41 |
| 2013-06-01 | $24.32 | $20.40 |
| 2013-07-01 | $24.27 | $20.40 |
| 2013-08-01 | $24.31 | $20.40 |
| 2013-09-01 | $24.31 | $20.42 |
| 2013-10-01 | $24.33 | $20.46 |
| 2013-11-01 | $24.37 | $20.48 |
| 2013-12-01 | $24.33 | $20.48 |
| 2014-01-01 | $24.35 | $20.50 |
| 2014-02-01 | $24.39 | $20.58 |
| 2014-03-01 | $24.37 | $20.52 |
| 2014-04-01 | $24.32 | $20.49 |
| 2014-05-01 | $24.28 | $20.46 |
| 2014-06-01 | $24.29 | $20.45 |
| 2014-07-01 | $24.28 | $20.46 |
| 2014-08-01 | $24.41 | $20.56 |
| 2014-09-01 | $24.39 | $20.54 |
| 2014-10-01 | $24.41 | $20.57 |
| 2014-11-01 | $24.53 | $20.66 |
| 2014-12-01 | $24.57 | $20.68 |
Note: Earnings are adjusted to December 2014 dollars.
Source: Author analysis of Bureau of Labor Statistics's Current Employment Statistics and Consumer Price Index, public data series.
The second figure below shows year-over-year changes in real average hourly earnings for all private employees (dark blue) and production/nonsupervisory workers (light blue). Even with the recent drop in inflation, real wages between December 2013 and December 14 rose at a modest rate of 1.0 percent. On average, real wage growth has been about zero for the last five years. As I’ve said before, it should be obvious to Federal Reserve policymaker that there is no sign of acceleration.
Year-over-year change in real average hourly earnings of all private nonfarm employees and private production/nonsupervisory employees, November 2009–December 2014
| All Private Employees | Production/Nonsupervisory | |
|---|---|---|
| Nov-2009 | 0.15% | 0.76% |
| Dec-2009 | -0.98% | -0.31% |
| Jan-2010 | -0.62% | 0.01% |
| Feb-2010 | -0.32% | 0.35% |
| Mar-2010 | -0.50% | -0.01% |
| Apr-2010 | -0.40% | 0.25% |
| May-2010 | -0.10% | 0.57% |
| Jun-2010 | 0.55% | 1.26% |
| Jul-2010 | 0.46% | 1.08% |
| Aug-2010 | 0.49% | 1.18% |
| Sep-2010 | 0.73% | 1.08% |
| Oct-2010 | 0.72% | 1.34% |
| Nov-2010 | 0.60% | 1.12% |
| Dec-2010 | 0.29% | 0.56% |
| Jan-2011 | 0.30% | 0.56% |
| Feb-2011 | -0.26% | 0.02% |
| Mar-2011 | -0.80% | -0.52% |
| Apr-2011 | -1.13% | -0.94% |
| May-2011 | -1.36% | -1.30% |
| Jun-2011 | -1.39% | -1.46% |
| Jul-2011 | -1.35% | -1.35% |
| Aug-2011 | -1.74% | -1.70% |
| Sep-2011 | -1.85% | -1.80% |
| Oct-2011 | -1.36% | -1.75% |
| Nov-2011 | -1.38% | -1.58% |
| Dec-2011 | -1.01% | -1.16% |
| Jan-2012 | -1.23% | -1.53% |
| Feb-2012 | -0.90% | -1.31% |
| Mar-2012 | -0.47% | -0.89% |
| Apr-2012 | -0.19% | -0.48% |
| May-2012 | 0.03% | -0.30% |
| Jun-2012 | 0.24% | -0.16% |
| Jul-2012 | 0.35% | -0.03% |
| Aug-2012 | 0.17% | -0.35% |
| Sep-2012 | 0.03% | -0.57% |
| Oct-2012 | -0.68% | -0.86% |
| Nov-2012 | 0.11% | -0.35% |
| Dec-2012 | 0.33% | -0.13% |
| Jan-2013 | 0.51% | 0.26% |
| Feb-2013 | 0.18% | 0.12% |
| Mar-2013 | 0.51% | 0.51% |
| Apr-2013 | 0.75% | 0.51% |
| May-2013 | 0.52% | 0.35% |
| Jun-2013 | 0.44% | 0.30% |
| Jul-2013 | -0.04% | 0.02% |
| Aug-2013 | 0.71% | 0.62% |
| Sep-2013 | 0.92% | 1.06% |
| Oct-2013 | 1.30% | 1.32% |
| Nov-2013 | 0.86% | 0.97% |
| Dec-2013 | 0.44% | 0.81% |
| Jan-2014 | 0.41% | 0.63% |
| Feb-2014 | 0.99% | 1.33% |
| Mar-2014 | 0.60% | 0.75% |
| Apr-2014 | 0.01% | 0.33% |
| May-2014 | -0.08% | 0.25% |
| Jun-2014 | -0.11% | 0.21% |
| Jul-2014 | 0.05% | 0.28% |
| Aug-2014 | 0.40% | 0.75% |
| Sep-2014 | 0.33% | 0.60% |
| Oct-2014 | 0.30% | 0.56% |
| Nov-2014 | 0.66% | 0.88% |
| Dec-2014 | 0.99% | 0.95% |
Note: Earnings are adjusted to December 2014 dollars. Light shaded area denotes recession.
Source: EPI's analysis of Bureau of Labor Statistics's Current Employment Statistics and Consumer Price Index, public data series.
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