Note: At the end of 2012, a significant amount of employee compensation was accelerated due to fiscal cliff concerns about higher income tax rates in 2013. That bumped up employee compensation at the end of last year. We are feeling the ill-effects of that now. Thus, the big percentage drop during Q1 2013 is also an outlier. ~ Ilene
Courtesy of Mish.
Inquiring minds are digging into the stunningly bad Quarter-Over-Quarter decline in wages and real wages across all sectors as noted in the Revised First Quarter BLS Productivity and Costs report.
Year-Over-Year numbers are still positive but the revised quarterly numbers shown above are an unmitigated disaster.
The BLS notes "Unit labor costs in nonfarm businesses fell 4.3 percent in the first quarter of 2013, the combined effect of a 3.8 percent decrease in hourly compensation and the 0.5 percent increase in productivity. The decline in hourly compensation is the largest in the series, which begins in 1947."
What's Going On?
It's quite easy to explain why this is happening, and it was all too predictable as well. Obamacare and inane Fed policies are in play as noted yesterday in Fed Policies and Obama Programs Exacerbate Credit Crunch to Small Businesses.
The Fed believes that holding interest rates low fosters business growth, hiring, and bank lending?
So why isn't that happening? …. by holding interest rates low, the Fed encourages not hiring, but rather corporate investment in software and hardware solutions that enable companies to get rid of workers.
Why hire someone at increasing minimum wages, and increasing costs of medical care, when you can borrow money for next to nothing and invest in solutions that require fewer workers?
What About Obamacare?
Obamacare is a huge part of the jobless recovery problem as well. I have talked about this on numerous occasions. Here is a partial list:
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