Wage-driven inflation - not seeing it

Does anyone see evidence of wage-driven inflation? I do not - if you do, please share the data!

If the Fed is making policy based on the idea of wage-driven inflation, then I hope they check their data carefully (I would think they would).

Over the last 5 months, inflation is running at about 2.5%, so inflation is slowing (see below chart and also A Macro analysis of consumer inflation and deflation - #5 by mostlylong).

Wages have risen over the last 1 to 2 years, but less than overall inflation. Wage growth has also slowed recently from 5.6% year-over-year in Mar 2022 (vs Mar 2021) to 4.6% year-over-year in Dec 2022 (vs Dec 2021). This is the fastest decline in wages since the aftermath of the financial crisis following 2008 (ignoring the weird up-down statistical anomalies during the 2020 shutdowns).

Also, looking at the nature of employment over the last two years, the last 6 months of net employment gains have been driven by part-time employment whereas in the prior 18 months (Jan 2021 to Jun 2022), net employment gains were driven by full-time work. It’s difficult to see how an absence of new full-time work can drive inflation over a prolonged period.

Perhaps the Fed should begin to move towards a pause in rate hikes before they really break something. The Fed has said that the Fed Funds rate is already in restrictive territory and thus should be acting to slow economic activity. No need to overdue it, right?

Average Hourly Earnings (Average Hourly Earnings of All Employees, Total Private (CES0500000003) | FRED | St. Louis Fed)
Full-time employment (Employed, Usually Work Full Time (LNS12500000) | FRED | St. Louis Fed)
Part-time employment (Employed, Usually Work Part Time (LNS12600000) | FRED | St. Louis Fed)


It’s interesting to see conflicting data on part-time vs full-time job reports.

Please have a look at the topic here → Control Panel: Predictions for 2023 - #4 by Leap1

In that post, Leap1 finds what seems to be factual information stating that full-time employment is what is driving the employment growth, not part-time employment. The article defines full-time as jobs who work > 35 hours/week. Maybe that’s the difference? Does anyone know how BLS defines full- and part-time employment?

→ would like to get to the bottom of this , as it seems important from a Macro standpoint

Full time in CT is over 29.5 hours per week. Meaning 30 hours per week. In CT.

I am saying we have more or less maxed out who wants full time jobs as a percentage of the workforce. There are more jobs that are both full time and part time on offer.

Around the margins people are constantly shifting to what they want. Employers are more generous than ever, more forgiving as well and better training. Workers can lose jobs that are not a fit but find what suits them easily.

This runs into the topic of productivity. Productivity can to a degree not go up and yet be going up longer term. Meaning new hires to better jobs may not raise productivity right away. But by moving up in the ranks the less productive job they left may be filled by another person moving up in the ranks. That makes possibly two people who now for reporting processes are not more productive but on the individual level are both more productive and more promising.

hi @38Packard

(by the way, thank you for all of your helpful posts, especially on navigating the boards)

just taking a basic look, it appears the data @Leap1 posted (https://www.advisorperspectives.com/dshort/updates/2023/01/09/full-time-and-part-time-employment-a-deeper-look) is similar to what I posted from the Bureau of Labor Statistics except I show the last 2 years and leap’s link shows the last 22 years (the link references the BLS as well).

Perhaps the uptick in part time jobs I show corresponds to the little uptick at the end of the longer series (circled below)? Kind of looks that way, so the two charts seem consistent with each other.

It’s interesting to note the uptick/downtick in PT/FT during recessions. Really strong in the financial crisis. (hopefully not too strong this time!)

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The uptick was seasonal workers for the holidays. Everything else was in line up to November. October was slightly higher than November.

The issue is the number of full time workers sucks the oxygen out of the room. There is only a marginal movement available of full time workers. There are so many full jobs that are available that part time workers have fallen off for several years now.