this is a title National Public Radio report.
Compared with the same period last year, the inflation rate reached 7.9% in February, another 4-year high. Wages can’t keep up. Average hourly wages in the private sector rose at an annual rate of 5.1% last month.
Some context is useful here; while real wages are falling, private nonfarm wages are still above their pre-pandemic levels (2.1% higher). This was especially the case for workers in minimum wage categories (including hospitality and leisure) (4.8% higher).
figure 1: Average hourly wages for production and non-managerial staff in private non-farm (black) and leisure and hospitality services (chartreuse) in 2020 (using CPI as a deflator). The NBER uses shades of grey to define the peak and trough dates of the recession. Source: BLS, NBER, and author’s calculations.
If the PCE deflator is used, inflation-adjusted wages will be higher.
figure 2: Average hourly earnings of production and non-managerial staff in private nonfarm (black) and leisure and hospitality services (chartreuse) in 2020 (using PCE deflator). The Cleveland Fed’s 3/10 nowcast is used for February’s PCE. The NBER uses shades of grey to define the peak and trough dates of the recession. Source: Bureau of Labor Statistics, Cleveland FedNBER, and the authors’ calculations.
