Nonsequitur: Wages Decline Again

November 5, 2012

As noted on Friday, the October BLS Jobs report showed a small increase in jobs created and a small increase in unemployment (7.9%).  But it also showed a decline in “real wages,” the value of earnings against inflation.

Average hourly earnings rose 1.6 percent, not enough to keep up with inflation (around 2%).  Production workers’ wages rose only 1.1 percent.  This is a trend throughout the “recovery,” but this month’s increase is the smallest since 2007.

Why the big drop in wages?  My guess is that most new jobs we are adding now are either part-time or temporary, which typically pay lower wages.  (You’ll find further discussion of this topic in my earlier entries “Part-time Recovery” and “Most Recovery Jobs are Low Wage”.)

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