Wages Rocket To Just Below 2002 levels

There is a sense in which you know something is on the agenda only when the other side begins to fight back. So Edward Lazear's remarks yesterday are just a further example of the administration's coming-to-terms with its poor ratings for economic handling. There has clearly been a concerted push on national security since the Vice-President's Sunday interview. But, spurred on by a certain cheeryness about the fall off in pump prices, there seems to be an ongoing campaign to talk up the economy also. The FT piece - written by Edward Luce, who also wrote the first front page story on the subject a month ago - gives a good account.  

Mr Lazear on Tuesday pointed to a 4.1 per cent increase in nominal workers' compensation in the first six months of this year as evidence that employee remuneration was starting to catch up with productivity growth, which has achieved an average annual 3 per cent increase since the US economic recovery began five years ago.

However, critics of the Bush administration say that real wage growth, which excludes the inflationary cost of healthcare that has fuelled compensation growth, continues to languish at or below annual inflation...... met with growing scepticism among economists who point out that real wages for most Americans are marginally below where they were four years ago, in spite of strong overall growth in gross domestic product. According to the Bureau of Labour Statistics, the average hourly wage for private sector non-farm workers was $8.17 in August 2006 (at 1982 prices) compared with $8.23 in August 2002.

8.17 plays 8.23. Its like split times in the 60 yards dash. Woosh! Wages are rising so fast they are just a hair's breadth from zooming passed where they were four years ago. I think this cartoon in the Post a few days back put it best.