Now that we have the report on consumer prices for December, let’s take a look at what happened with real wages in 2017.
Consumer prices increased +0.1% in December, and wages for non-managerial workers rose 0.3%, This for that month the average worker earned 0.2% more.
For the year, the nominal wages of non-managerial workers rose 2.4%, while prices increased 2.1%, meaning that for the entire year workers saw a whopping 0.3% increase in real pay:
But because inflation accelerated slightly in the second half of the year, and nominal pay increases slackened, real pay has actually decreased roughly -0.8% since peaking in July, and is barely up at all over the last 24 months.
Next let’s take a look at the real aggregate pay that non-managerial workers earned in 2017. I like this measure because it tells me how much the economy as a whole has delivered to the middle and working class during the economic expansion. Here’s the graph:
For the entire expansion, real aggregate pay has increased ~23%. On a YoY basis, aggregate real payrolls increased about 2.5%, about the average for this expansion:
new deal dem
it is probably important to have this pointed out, but aside from the difficulties of measuring “inflation” and thus “real” wages, i would offer this question from the devil:
is there any reason to expect (morally) real wages to rise?
here i don’t mean to sound like a Republican… though I am sure I will… basically my concern is that the planet cannot support an ever increasing (exponential) increase in “consumption.” but i think a reasonably honest case could also be mad that “workers” do not (as a class) increase the amount that they produce, so is it really so unfair if someone who invents something, or organizes a business to more efficiently produce something, should enjoy the fruits of his invention…
i do not mean to deny that excessive inequality can lead to bad outcomes, and that moreover a great deal of “profit” really is “theft” and these ought to be addressed…
but i don’t think we do ourselves any good politically or personally to just assume without thinking about it that we “deserve” more.
especially if “more” turns out to mean “cheap plastic toys” at the cost of our time, our health, our sanity, or our world.