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Tracking wage growth

A measure of labor earnings growth from the Atlanta Fed

The Current Population Survey (CPS) from the US Census is one of the oldest, largest, and most well-recognized surveys in the United States. Every month, the survey is used to collect information from a probability-selected sample of about 60,000 households. The US Bureau of Labor Statistics then uses those data to calculate the median usual weekly earnings of wage and salary workers.

The Federal Reserve Bank of Atlanta also uses CPS data, and the FRED graph above shows monthly values of the wage growth tracker the Atlanta Fed produces with the data. The households sampled in the CPS are interviewed at regular intervals, and the Atlanta Fed measures the growth rate of typical labor earnings by comparing the wages of about 2,000 anonymous individuals who respond to the same survey 12 months apart.

The wage growth tracker series report the median, or typical, percent change from a year ago in all the hourly wages used in this calculation. That’s why it is called “unweighted.” The wage growth tracker reports both a 3-month moving average (the blue line) and a 12-month moving average (the red line) because the survey respondents change from month to month. A moving average smooths out data outliers that are likely to distort the visualization of trends and cycles by adding all the data points over the stated number of months and dividing them by that number. The longer the length of the moving average, the smoother the data are. (Also notice that the 3- and 12-month moving average calculations are labeled by the last month of those time frames. So, while the data start in January 1997, the earliest data points are in March and December 1997.)

Now, what do the data show? First, the tracked wage growth rates have not been smaller than zero between 1997 and the time of this writing. Perhaps this isn’t surprising because the CPS reports non-inflation-adjusted, or nominal, earnings. Second, the downward trend in tracked wage growth recorded between 1997 and 2011 reversed after that later date. Last and most startling, the slowdown in tracked wage growth that followed the 2001 and the 2007-2009 recessions (the shaded areas in the FRED graph) did not materialize after the 2020 recession. Instead, tracked wage growth has accelerated noticeably since 2021 and only recently seems to have plateaued. That reflects the currently resilient conditions of the overall labor market and the upward pressure on nominal wages resulting from the recent bout of above-average inflation.

Don’t lose track of the FRED Blog, as we’ll continue to explore this rich trove of wage growth tracker data over the next several months.

How this graph wase created: Search FRED for and select “12-Month Moving Average of Unweighted Median Hourly Wage Growth: Overall.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “3-Month Moving Average of Unweighted Median Hourly Wage Growth: Overall.”

Suggested by Diego Mendez-Carbajo.

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