The Dow’s recent push higher has prompted another round of soul-searching about the classic Wall Street/Main Street dichotomy. Today’s US report on labor productivity in the fourth quarter of 2012 offers a few decent data points on “hourly compensation” for workers in nonfarm businesses. On a headline basis, things don’t look too awful. In the fourth quarter, hourly compensation rose at an annualized rate of 2.6%, compared to the third quarter. It rose by the same amount when compared against the fourth quarter of 2012. But that data doesn’t take consumer price increases into account. Inflation-adjusted—what economists like to call “real”—hourly compensation was up a scanty 0.8% in the fourth quarter of 2012, compared to fourth quarter of 2011. Here’s a look:
That was the best quarter of the year for pay raises by far, thanks in part to declining inflation pressures from products such as gasoline. During the first two quarters of the year, Americans saw fairly decent “real” pay cuts at annualized rates of 2% and 0.7% respectively. The third quarter was dead flat. Averaged out, inflation-adjusted hourly compensation was down 0.6% in 2012. Oh, and the Bureau of Labor Statistics tells us that real hourly compensation also fell 0.6% in 2011.