Wages Picking Up

Today we’ll have three quick blog posts discussing some data from this month’s nonfarm payrolls report. In this first post, we’ll focus on wages. As shown in the chart below, YoY growth of average hourly earnings for all private employees is at its strongest pace since the aftermath of the recession. YoY growth for last month was also revised up to +2.7%. As shown below, though, production and non-supervisory average hourly earnings growth (pay for non-managerial earners) is not accelerating as dramatically. We should also note that earlier this week the employment cost index for Q4 showed the strongest YoY wage and salary growth in the post-recession period. The ECI adjusts for the composition of the labor force, so if anything the relatively strong pace of growth we’ve seen in wages recently could be understated.