Pandemic wage gains were just a fluke


Come friday. We're going to get the latest stab shot on average hourly earnings in this economy and it is expected to show continued strong winds gains but our guy on economic statistics mitchell hartman. He says best to ignore that and focus instead on the trouble yet to come so a crazy thing happened on the way to the pandemic recession. After the economy shut down and twenty million people lost their jobs. Workers average hourly earnings went up skyrocketed. Actually up eight percent year over year but what got was was not signal. Joseph bruce willis is chief economist at rsm consulting. He'll be our guide through this thicket of wage data and when he says noise not signal he means fast. Rising wages have been a statistical anomaly of the pandemic economy high paid professionals kept working from home and mostly held onto their paychecks but millions of mostly low paid service workers lost their jobs. When you've got forty percent of households making forty thousand or less seen a job loss or loss in wages. That explains that head. Fake if you will on wages forty year old cinnamon deutsche is. An example of what bruce willis is talking about. She was teaching at a childcare center in asheville beulah ohio when it closed and she got laid off in march her three hundred and fifty dollars a week. Paycheck disappeared from the average earnings calculation. But she got unemployment which included six hundred dollars a week in extra federal pandemic pay until she was hired back three months later. I made twice as much on unemployment with the extra six hundred dollars. As i do now but i am glad to be back to work. I mean i like going to work so like many americans do inches. Income actually went up for a while because of additional unemployment benefits and relief checks but those temporary effects are fading. And just says we're in for a rude awakening. What i think we're going to see is a very bifurcated. Wage market this idea that k shaped economy separation between the hadgem. The have notch bruce willis says the haves those who work in what he calls. These zoom economy will have made goes at the upper end. Those who are already thriving. There's going to be competition for those workers. you know. Premium place their wages but for lower wage says workers even as the economy reopened and employers. Start staffing up again. Those in the middle to the lower end of the market where the damage occurred. They're not going to see a lot of wage growth. That's due in part to supply and demand. Lots of unemployed workers looking for jobs not enough job openings to give them leverage to demand higher pay. then there's something. Economists call downward nominal wage rigidity firms during hard times ten not reduce. The wages of the employee said they keep on the books but when the times get better wage gains core restrained. That is pretty much what cinnamon joy is seeing in her job. She's back at work fulltime at her previous salary of three hundred and fifty dollars a week. The extra unemployment income she banked back in the spring has run out. My credit card is back up to you. Know almost max out trying to pay five or ten bucks extra so that i can pay that down. I make enough money to pay my bills and have mcdonald's once in a while but you know if my car breaks down or have an emergency am just outta luck i i have to borrow from. Somebody doesn't expect chill get a raise until she hits ten years of service in twenty twenty

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