Wage gains weakened in December even as inflation likely accelerated, pushing workers even further behind and making meeting it tougher for millions of American families to meet their household needs.
The average hourly earnings of what the government calls “production and nonsupervisory” employees rose in December to $26.61, nearly a 0.7 percent gain for the month, according to data released by the Labor Department on Friday. That’s an acceleration in wage gains on a month-to-month basis from the 0.45 percent in November.
But on an annual basis, gains have slowed. The annual gain was 5.8 percent, down from six percent in November.
And inflation likely has put the wage gains underwater. In November, the Consumer Price Index rose 6.8 percent compared with 12-months earlier. And many economists expect the December numbers, which will be released next week, will show even more inflation. So real earnings, after inflation, are likely to fall even further.
More broadly, the year-over-year gain for all workers declined to 4.7 percent from five percent in the prior month. Historically speaking, that’s a big gain. But when weighed against inflation, it means American employees are getting paychecks with less spending power than they were a year ago. Even if inflation holds steady in December, paychecks will have contracted 1.1 percent in real terms.
Given numbers like these, it is no wonder inflation is the top concern for Americans and approval of Biden’s handling of the economy has tanked.