Wage growth is falling further behind inflation, meaning that workers' real wages are falling rapidly.
Average hourly earnings for all employees on private nonfarm payrolls rose by 0.3% in April, a bit lower than economic forecasters had expected, according to data released Friday from the Bureau of Labor Statistics. Nominal earnings have increased 5.5% on an annual basis.
That earnings growth rate is well below inflation. Although inflation numbers are not yet available for April, the Consumer Price Index grew at 8.5% in the year ending in March.
To sum up: Real earnings appear to be falling by a few percentage points, although it's difficult to make an apples-to-apples comparison.
The White House Council of Economic Advisers under President Joe Biden acknowledged the bad news about earnings.
"While we do not yet have inflation numbers for April, it is likely that yearly nominal wage growth was slower than inflation," the group said in a blog post Friday.
In fact, inflation earnings were already falling at the fastest pace in 40 years before April, according to Jason Furman, the chairman of President Barack Obama's Council of Economic Advisers.
Furman wrote in a post for the Peterson Institute of International Economics that Friday's report "suggests that wage growth may be slowing."
That is, nominal wage growth is slowing, while inflation is accelerating.
The analysis presented an estimate of wage growth adjusting for the fact that the hourly earnings figures released Friday are affected by changes in the workforce — for instance, they're artificially lowered if more low-income workers are hired back in a given month.
ECONOMY MARCHED ON IN APRIL WITH 428,000 NEW JOBS, UNEMPLOYMENT AT 3.6%
In other words, paychecks are not growing fast enough to keep pace with the increasing prices for gas, groceries, rent, and a wide range of other costs.
Falling real wages help explain why voters give Biden poor ratings on the economy, even though the labor market looks strong. Friday's report showed a healthy increase of 428,000 new jobs in April and the unemployment rate holding at 3.6% — extremely low by historical standards.
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The strength of the labor market, though, has been overshadowed in public opinion by soaring inflation.