Part 3: How much (more) money we're making - June 4th
Bottom Line: In today's third story breaking down the employment report we'll explore real incomes. The average hourly wage for all Americans is currently $26.92 and with an average work week of 34.5 hours the average income is now $48,151 (an improvement of $143 from a month ago). Here are the highlights:
+7 cents per hour (month over month)
Real incomes have risen from $47020 to $48,151 year over year
+2.7% year over year increase in hourly earnings
Much of what was reported on Friday, regarding incomes, derived from a narrative that they still weren't rising. Whether that's politicking or a lack of comprehensive reporting – that's demonstrably false. The average person is earning 2.7% more than this time a year ago. Now, is that as good as we'd like it? No, there's absolutely room for improvement but income growth has essentially tracked economic growth over the past year in hindsight. Over the past four quarters US economic growth has been 2.9%. Add in the benefit of the Tax Cut and Jobs Act and the average person is making just over $1,100 more than this time a year ago while saving just over $1,800 on federal income taxes as well. What does that mean?
The average net take home pay year over year has increased by 5.4%
That's remains the best in over 32 years. For most that claim not to have seen the benefit of the tax cuts – it's because withholding adjustments haven't been appropriately made – not because they're not set to receive the benefit. That'll all be reconciled by tax time next year but it's reminder to look into making adjustments sooner if that's your situation.
Here's my summary quote from last month:
A month ago, I suggested we'd have significant upward revisions in this month's report and that's exactly what we received. Expect more positive revisions and another solid report next month.
Right on the money. So, what will we likely see from here? We're set up for the best summer hiring season in over a generation. With a record number of job openings and the class of 2018 ready to enter the workforce, I'd expect to see a strong start to summer that accelerates through the summer.
Until next month...