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Wages down for second full year in 2005

Adjusted for inflation, hourly and weekly earnings fell for most workers in 2005, according to today’s report (Table B) from the Bureau of Labor Statistics.

Real hourly earnings were down 0.5% and weekly earnings fell by 0.4% between December 2004 and December 2005 (note that these values, reported by the BLS, use a different measure of price growth, the CPI-W, which rose slightly faster than the CPI-U last year). As shown in the chart below, on a year-over-year basis, real hourly earnings have fallen 18 out of the last 20 months (17 of 20 months for weekly earnings). The decline in real wages results from both faster inflation over the course of 2005 (up 3.4% for the year, and the fastest yearly price growth since 2000) and slower nominal wage growth over the past few years especially when compared to the pace that prevailed before the jobless recovery.