Hourly Earnings, pre- and post-Covid

Hourly Earnings, pre- and post-Covid

Comparing hourly earnings before and after the Covid pandemic, attempting to remove the effect of the pandemic.

The Bureau of Labor Statistics, part of the United States Department of Labor, produces data about employment and prices. Together, this data can tell us about the real, that is, inflation-adjusted situation of workers. ⁽¹⁾Real earnings data (those expressed in constant 1982-84 dollars) result from the adjustment of average hourly and weekly earnings by the BLS Consumer Price Indexes. Real earnings for production and nonsupervisory employees are deflated by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), while real earnings for all employees are deflated by the Consumer Price Index for All Urban Consumers (CPI-U). Real earnings indicate the purchasing power of money earnings after adjustment for changes over time in the prices of consumer goods and services. These data cannot be used to measure changes in living standards as a whole, which are affected by other factors such as total family income, the extension and incidence of various social services and benefits, and the duration and extent of employment and unemployment. The long-term trends of these earnings data also are affected by changing mixes of full-time and part-time workers, high-paid and low-paid workers, and so on. BLS: Employment, Hours, and Earnings from the Establishment Survey
https://www.bls.gov/opub/hom/pdf/ces-20110307.pdf

The pandemic, or rather the response to it, created a large disruption in economies. Is it possible to eliminate or reduce its effects? This is an important question, as politicians of both parties make varying claims about their own performance. There are several approaches involving the selection of time frames for comparisons, and selecting these greatly informs the outcome of analysis. ⁽²⁾See:
Competing Narratives on Real Wages, Incomes Under Biden

I created two periods of time: Pre-pandemic and post-recovery. I ended the first period when the trend of hourly earnings was its highest level before the pandemic. I started the second period when the level returned to the pre-pandemic level. Hourly earnings reached pre-pandemic highs in February 2020, and returned to about that around August 2022. Graphically, this is shown in Chart 3.

The two time periods to compare are from A to B, and C to D. The first is the Trump administration from its start until the start of the pandemic’s effect on earnings. The second is the Biden administration from August 2022 (return to pre-pandemic job levels) to the present, which at the time of this writing is July 2024. (Point B to C is the pandemic period, which I do not count.) (Click illustrations for larger.)

Table 3 shows the results of this analysis.

From points A to B is the Trump administration before the pandemic. During this period, real average hourly earnings of all employees grew by an average of $0.0092 per month, or 0.09%.

From points B to C is the pandemic period, which I do not count.

From points C to D is the Biden administration starting when earnings returned to its pre-pandemic level, then continuing to the present. During this period, earnings grew by an average of $0.0087 per month, or 0.08%.

Data from U.S. Bureau of Labor Statistics: Employment, Hours, and Earnings from the Current Employment Statistics survey (National), series CES0500000013. Author’s calculations and chart. @bob_weeks, bob.weeks@gmail.com.