>This data from the Bureau of Labor Statistics was released today:
>
>"Real average weekly earnings increased by 0.3 percent from July to August
>after seasonal adjustment, according to preliminary data released today by
>the Bureau of Labor Statistics of the U.S. Department of Labor. A 0.3 percent
>increase in average hourly earnings and a 0.3 percent rise in average
>weekly hours were partly offset by a 0.3 percent increase in the
>Consumer Price
>Index for Urban Wage Earners and Clerical Workers (CPI-W)."
>
>This seems to indicate no gain whatsoever. In fact, if more hours were
>added to the work week, and the CPI rose, aren't workers losing out a bit
>here?
>
>Question: When the govt. refers to "real weekly earnings," as above, do
>they really mean "real earnings," which I have always taken to refer to
>actual purchasing power, or is it something else?
Real earnings = earnings deflated by some price index, like the CPI. The official real earnings numbers are deflated by the CPI for wage and clerical workers (CPI-W), which is different from the more familiar headline CPI for all urban consumers (CPI-U). The CPI-W supposedly reflects the market basket of the working class. Fortunately, it shows a generally lower rate of inflation than the CPI-U, meaning that a real wage series that uses the CPI-W is going to look better.
Generally, real wages have been rising since 1995, reversing the downtrend that started in 1973. For much of the recession, real wage growth was actually higher than the 1990s boom, which has taken some of the sting out of the downturn.
Doug