Average Weekly Hours Per Earnings

Earnings Per Hour Doesn't Give The Proper Credit To What Is Really Driving The Ratio

February 3rd, 2024 - Volume 10 (2024), Missive 25 (Saturday)

• Hours Fell Faster Than Earnings Last Month, But Both Contracted

• The Increase In The Quantity Of Earnings Can’t Match Pace With The Decrease In The Quality Of Earnings.

Much has been made about yesterday’s employment report being a “blow out” insofar as the amount of payrolls exceeding that of what was expected by quite a bit. In fact, the BLS reported that its job birth / death model recorded a net positive of 353,000 payrolls compared to the 185,000 expected for the month. Adding to this euphoria was the fact the average hourly earnings rose 0.6 percent for the month which would seem to indicate that not only are there more jobs, but that these jobs are paying more to boot. However, the devil, as they say is in the details. You may be shocked to know that weekly earnings actually fell by 0.03 percent last month. Although this appears to be contrary to what you just read a sentence above, you must by now realize that you are missing one piece of very critical information. And that is the fact that last month, hours worked fell by ten times as much as earnings did, so the calculation records a positive pace of earnings per hour, but it is the hours per earning that is really driving the calculation.

Hours fell ten times faster than earnings did last month.

Its the law of averages, or actually the law of understanding averages, that few too many people will look beyond the actual headline rate of the product and not what is moving it. Average hourly earnings have been growing as a rate for many decades now, but you have to understand that the driving force behind that has been weaker