The November BLS Report—Another Jobs Show About Nothing

If the monthly jobs report were a TV sitcom it would truly rival “Seinfeld” as a “show about nothing”. That is to say, for years the report has suggested nothing especially remarkable about the US labor market, but without fail the talking heads of bubblevision nevertheless launch into energetic chatter about its manifold significance each and every month.  More often than not, they even pronounce it to be the most important monthly jobs report since, well, the last one.

For instance, the November average hourly wage rate posted 12 cents per hour higher than the October level, and if you multiple that figure by 12 you get $1.44 per annum, which, in turn, would amount to a 4.11% annual gain.

But so what? That’s less than the LTM run rate of inflation, which was 4.44% according to the trusty 16% trimmed mean CPI for October. The larger point, moreover, is that the November increase—which amounted to nothing in real terms—wasn’t just indicative of a spot of bad luck or some kind of short-term aberration.

Far from it. As it happens your editor can (very) dimly recall sitting at a desk in the Longworth House Office Building as a junior congressional staffer tasked with writing a half page memo on the January 1973 jobs report. Of course, that was more than 50 years ago, but some things have remained the same.

In fact, exactly the same. We are referring to the inflation-adjusted average hourly wage rate. Not only did it not change a whit during this past November, but it also actually hasn’t gained a penny of real purchasing power in the last half-century!

Inflation-Adjusted Nonfarm Average Hourly Wage Rate, 1973 to 20023

Needless to say, it took a whole lot of Fed money-pumping during that long interval to generate the round trip to nowhere depicted above. To wit, the nominal average wage actually rose from $4.05 per hour in January 1973 to $29.30 per hour at present according to this morning’s BLS report. Yet every dime of that 625% wage increase got devoured by inflation.

So the better topic for the monthly jobs chatter on bubblevision’s long-running financial sitcom might be why in the world has the agency charged with superintending “stable prices” produced so damn much inflation? And also, why hasn’t a central bank balance sheet, which has grown from $98 billion to $8 trillion or by 82X over that period owing to recurrent rounds of monetary “stimulus”, generated more success in raising real wage levels?