Another Punk Labor Day—And The Fed Owns It

Well, here’s one which reminds us that Labor Day isn’t what it used to be. During the 44 years since early 1979 the inflation-adjusted earnings of full-time male workers have gone exactly nowhere. In fact, the figure in Q1 1979 of $408 per week (1982$) was 4% higher than the $391 level posted for Q2 2023.

Stated in today’s dollars of purchasing power (Q2 2023 $), the median real full time earnings level back in early 1979 was $64,300 annualized, which figure now stands at $61,660 annualized. That’s truly a whole lot of nowhere for nearly a half-century of elapsed time.

Inflation-Adjusted Weekly Earnings of Full Time Male Workers, 1979 to 2023

For avoidance of doubt, here is the longer-term picture, reaching back to the immediate post-war economy in 1947. During the next 26 years thru November 1972, average real hourly earnings in the manufacturing sector rose by 86% or by a robust 2.44% per annum.

But that’s about all she wrote. After Tricky Dick Nixon shit-canned the gold-backed dollar at Camp David in August 1971 real wages plateaued at sightly higher levels during the inflationary 1970s and then began a long descent. During the 44 years after peaking in early 1979, real hourly manufacturing wages have actually contracted by nearly -6% or -0.15% per annum.

Needless to say, the post-1979 flat-line so dramatically depicted in the chart below puts the kibosh on monetary central planning as practiced by Bubbles Alan Greenspan and his heirs and assigns. Indeed, the whole point of all that money-printing was allegedly to float all economic boats higher, thereby generating better living standards for wage workers than the private market had generated with no help from the Fed’s money-pumpers during the quarter century after WWII.

Alas, this chart is living proof that the great fiat money experiment was a bust. Totally.

Inflation-Adjusted Average Hourly Manufacturing Wage, 1947 to 2023