Lots of people are saying wage growth may be about to turn.
We really need it.
Today, UBS’ Maury Harris brings us this simple chart that subtracts the rate of jobs growth in low-wage industries from the jobs growth rate in high-wage ones.
Anything greater than 0 means growth in high-wage industries is up. If it’s less than zero, then low-wage industry jobs growth is up.
And we’ve been in less-than-zero territory for about the past two years. Harris:
Over the first two months of Q2, private sector hours worked have risen at a 4.1% annual rate — in the neighbourhood of our 5.0% forecast for Q2 annualized real GDP growth. Purchasing power is improving, with payroll earnings so far in Q2 rising at a 5.4% annual rate versus 4.0% in Q1 and 3.6% in Q4.
That improved purchasing power reflects past job growth and is coming despite some deteriorating incremental job quality, as jobs in low-wage industries are rising faster than jobs in high-wage industries.