“the employment cost index: wages and salaries shows a decline since 4Q19”

I do not understand how one can write this sentence in 2023, and still be living on this planet. I retrieved data from FRED (ECIWAG), version posted on October 16, 2023. I plot:

Figure 1: Employment cost index: wages and salaries: Private Industry Workers (ECIWAG), Dec. 2005=100 (blue), and ECI deflated by chained CPI (adjusted on monthly data using X13) (tan), and ECI deflated by PCE deflator to 2020$. NBER defined peak-to-trough recession dates shaded gray. Source: BLS via FRED, BLS (CPI release), NBER, and authors calculations. [corrected and updated 12/14/2023]

The quote is from the same person who asserted that the government was delaying and/or suppressing publication of median wage data, ridiculed the imminent Ukrainian counteroffensive in September 2022, couldn’t find net domestic product in the NIPA accounts, didn’t think that economists discussed monopsony, etc.

Update, 12/14/2023:

Updated graph. I can see how someone might say decline *in the real rate*, although the *real* rate might or might not be higher than 2019Q4, depending on the deflator. The nominal rate (which is what the “ECI: wages and salaries” is when not preceded by an adjective).


38 thoughts on ““the employment cost index: wages and salaries shows a decline since 4Q19”

  1. David S

    Interesting. This graph matches the evolution of my professional billing rates during the same time period. I doubt anything is connected because the universe is full of coincidences that are immaculate and unknowable.

      1. baffling

        Johnny, I got a 10% pay raise this year without asking. why? because for the past couple of years my employer saw a large amount of turnover, even within the business itself, primarily to achieve pay raises. that churn was costly. so they started to increase pay without the workers “negotiating” a pay raise. do you count this as workers demanding wage increases? it was not a trivial amount of workers who received a wage adjustment. none of them negotiated or asked for it. this flies directly in the face of what you have been claiming.

        1. pgl

          Hey Jonny boy thinks if you did not threaten the boss’s life – any pay increase he gave you does not count. Of course in Jonny boy’s Fortune 200 days he was the lackey who brought the bagels and if did not like his pay – he would spit on the cream cheese.

          1. JohnH

            Hey, pgl, it wasn’t I who claimed that labor DEMANDED higher wages…it was Krugman.

            baffling’s account is further evidence that it is employers who decide how much of a pay raise to bestow on their employees, contradicting Krugman’s narrative.

            Since it is employers who decide, they are the ones contributing to a wage-price spiral…but, as we know, economists don’t like to attribute anything on Corporate America…it’s always labor’s fault.

          2. baffling

            “baffling’s account is further evidence that it is employers who decide how much of a pay raise to bestow on their employees, contradicting Krugman’s narrative.”
            so you either have a reading comprehension problem, or you are intentionally a turd. i provided no such evidence. employers are responding to worker’s demands by providing pay raises. why should a worker be restricted to only negotiate with their current employer? if you are pro worker, as you claim, why would you advocate for such world? if a worker takes a job elsewhere at a higher rate, then that worker has negotiated a pay raise. you want to avoid this truth on a technicality, because it makes your argument a total piece of sh!t. johnny you are one of the most dishonest folks on this blog. and considering the expertise of some on this blog, that is not a compliment.

    1. JohnH

      More frivolous and mendacious drivel from Peppa Pgly, who doesn’t even the wherewithal to back his nonsense with facts.

  2. pgl

    I think we are looking at the same thing but I see ala FRED

    Observation: Q3 2023: 162.8

    Updated: Oct 31, 2023
    Units: Index Dec 2005=100,
    Seasonally Adjusted
    Frequency: Quarterly

    Now I challenged little Jonny to tell us what happened to prices (he hasn’t) but nominal ECI seems to have risen by 17.2%,

  3. pgl

    “the employment cost index: wages and salaries shows a decline since 4Q19.”

    Not including fringe benefits as in reporting total compensation? Given the fact that real fringe benefits fell a wee bit, one would think Jonny boy would have used this measure. Then again little Jonny boy is not very bright.

  4. JohnH

    Here’s the data I used.

    Employment cost index, wages and salaries/CPI
    4Q19: 104.4
    3Q23: 103.3

    You’re welcome to discuss with Christian Zimmerman at FREDblog how he comes up with these results and what planet he has been living on.

    And the host is welcome to show me where Krugman recently talked about monopsony when he claimed that workers DEMANDING higher wages contributes to the wage-price spiral.

    1. Macroduck

      Why would Zimmerman’s conclusions based on data from 2018 have anything to do with conditions in 2023?

      Johnny, I pointed this out to you already. Your link is to a 2018 article. Zimmerman’s conclusions are from 2018. The graph in his article continues to update, not the text.

      By the way, for those who haven’t bothered to follow Johnny’s link – knowing his links so rarely say what he claims they say – the main point is that it’s a bad idea to compare inflation-adjusted data to non-inflation-adjusted data, bit that FRED allows you to convert from one to the other. Johnny has waved this article around at least twice, claiming it supports his case. That’s nonsense. But that’s Johnny.

      Johnny’s claim is that real wage gains are weak – because Johnny’s agenda is to say the U.S. is BAD. In an earlier comment, Johnny pointed to the recent performance of real hourly wages as evidence that a tight labor market doesn’t help raise wages.

      Here is a pared-down, edited version of my response, showing that Johnny is utterly wrong. Johnny has ignored this evidence, as usual:

      We’re about 37 moinths into this expansion, and real average hourly earnings are up 0.9% from a year ago. At the same point in the prior expansion, real average hourly earnings were up 0.1% y/y. We’re well ahead of where we were at this point in the prior expansion.


      Here’s median usual weekly real earnings, for which we have more data, along with real average hourly earnings:


      What do you know? Up 0.8% from a year ago, pretty much like real average hourly earnings. At this point in the prior expansion, median usual weekly real earnings were DOWN 0.6% y/y. And two cycles ago, median usual weekly real earnings were down 0.3% at this point in the expansion.

      1. JohnH

        Ducky pulls the trigger before aiming, as he often does. Maybe he should try reading my link. The data includes most recent updates. IOW, it doesn’t stop in 2018.

        BTW I reran the data using FRED–fred.stlouisfed.org/series/ECIALLCIV

        Interesting!, Very interesting! It looks like inflation has indeed outpaced employment cost index.

        1. Macroduck

          Johnny, Johnny, Johnny….

          I wrote “The graph in his article continues to update, not the text.”

          You wrote “Ducky pulls the trigger before aiming, as he often does. Maybe he should try reading my link. The data includes most recent updates.”

          So you missed the part where I said the data update, and ignored the part where I showed that wage gains are stronger now than a the same point in the prior two cycles. Johnny, why are you dodging the facts? Let’s hear what you have to say about the actual data.

      2. JohnH

        I’m still waiting for someone to explain how pervasive monopsony combined with workers’ general reluctance to ask for wage increase squares with economists’ ridiculous assumption that workers DEMAND increased wages, supposedly driving the currently non-existent wage-price spiral.

        1. baffling

          Johnny, you argue that the gpd (or gdi, take your pick) cannot be used to justify economic growth because the difference is too small to separate from noise. and yet, this exact same issue exists in this case for employment cost index. but you permit yourself to make a strong claim that the index has indeed dropped. but you do not permit others to make the claim that the economy is growing using GDP or gdi. why are you being hypocritical? it seems you only allow it when it serves your agenda.

          1. JohnH

            The problem arises only when different indicators point in different directions. GDP shows an increase over the past year, GDI negative growth.

            In the case of labor market indicators, some indicators show pathetically small growth in real wages while the employment cost index shows negative growth since before the pandemic. According to economics catechism that economists genuflect to, tight labor markets are supposed to bring real wage gains, but any way you look at it the gains in this market are niggardly, particularly when compared to past tight labor markets.

          2. baffling

            “The problem arises only when different indicators point in different directions.”
            ok, if that is what you claim. then
            “In the case of labor market indicators, some indicators show pathetically small growth in real wages while the employment cost index shows negative growth since before the pandemic. ”
            this is EXACTLY what you said above. indicators are pointing in different directions. the strength of those directions is not different when looking at economic growth or labor market indicators, even with your exaggerated use of the English language. you are being hypocritical Johnny. this is simply arguing in bad faith on your part. it is dishonest commentary, which is usually what we get from you on this site. stop being such a hack Johnny.

        2. Macroduck

          Man, Johnny, you really aren’t very good at this. Your question amounts to an attempt to distract from empirical evidence. The data show you’re wrong, so you ask “What are you going to believe, my question or some lying data?” The answer to whether real wages are rising faster in the current tight labor market than at the same point in other expansions comes down to data. I’ve offered data – twice – showing that real wage gains are stronger now. Instead of addressing those data, you insist that your rhetorical concoction is th real issue; you want monopsony and reluctance to negotiate to be the whole story. So, I addressed your story. First, I explained that monopsony doesn’t suspend the laws of economics, but merely distorts them. Menzie linked to two prior discussions of labor market monopsony that you ignored. Supply and demand still determine wages. Then, I wrote this:

          “In the U.S., instead of negotiating for wage increases, most workers look for higher paying jobs. Here’s the picture, truncated because the Covid recession messes up the scale:


          “A high rate of job quits generates a faster rate of hourly earnings gain. Workers do have the ability to drive wage gains in a tight labor market, even if they don’t negotiate with their current employer; they negotiate with their next employer.

          “And, by the way, you can check for yourself here:


          “Just click on “job switcher” to see the data. Those who switch jobs increase their pay at a faster rate than those who don’t.”

          See? Your concocted question answered.

          Johnny, you chickened out of responding to either. You lie about the data. You pretend to know more about economics than Nobel Prize winners. You scamper away from any response that proves you to be wrong. You’re a troll, a fraud, a poser.

    2. Pgl

      Leave it ro Jonny boy not to look up Nominal ECI and the price level from original sources. Once again Jonny not proves he is a lazy moron

    1. Ivan

      Are you telling me that forecasts from St. Lois Fed don’t always come through?

      You ares shattering my world – and making me a little sad!

      Next are you going to postulate that there is no Santa and that its mom who fill the stockings in the middle of the night?

    2. JohnH

      No, they’re actual data, dimwit. When you make and save a FRED chart, you can have it update…and the Zimmerman chart does automatically update every time new data is available.

      1. Pgl

        The date of his text is Feb 2018. Yea he claims to update his charts but only a moron like you would be so lazy not to look at the properly sourced data

      2. Ithaqua

        You win this round, that’s for sure! Got to say, though, a blog post with a date that’s 5 1/2 years old and relying on the reader to understand that the chart – and only the chart – is up to date isn’t really the way to do it.

  5. Macroduck

    By the way, common practice among economists is to compare similar points ts between business cycles. By comparing the end of one business cycle to what we should hope isthemiddle ofthis ine, Johnny is ignoring what is considered good practice, and ignoring the normal patterns seen across business cycles.

    Not the way good-faith arguments are made.

    1. JohnH

      In the last business cycle, unemployment didn’t drop into what could be termed a tight labor market until very late in the cycle. In this cycle, the labor market has been tight for almost three years now. Certainly, it is fair to compare one tight market to another…and the difference is stark. Real wages rose in the last tight labor market but those in this tight market are barely above where they left off at the end of the last. In fact, they have grown only as fast as average real wages for the last 40 years.

      This tight labor market has only delivered average growth despite having unemployment rates well below average.

      Tricky Ducky is desperately trying to put lipstick on a pig by claiming that real wage growth is anything but pathetic. Meanwhile, profit margins are near record highs, which he tries to cover up. This brings us to the key point–Corporate America plays a significant role in pricing (inflation) decisions and in setting wage increases. It makes you wonder about Ducky’s motivation for blaming the victim for inflation, consumers for expectations and labor for their non-existent ability to DEMAND wage increases. Since Ducky talks like a corporate stooge and quacks like one, he must be one!

      1. baffling

        communist Johnny, please tell me where in the world your preferred economic model has been successful. you have a problem with capitalism, it is obvious. you say it is a failure. but compared to your preferred model, it is a stunning success. again Johnny, show me where communism has been even remotely successful over the long or even medium term.

  6. pgl

    Let’s be clear here. Chris Zimmerman wrote a blog post almost 6 years ago which Jonny boy loves to repeat as if it were new. Maybe the charts are up to date but they are second hand sourced data. A person with a real brain (which Jonny boy lacks) would look up ECI data and price data from the actual BLS reporting and not some blogger second hand sourcing.

    Of course Jonny boy has always been too lazy to do and also too stupid to do the real work himself. Now I have suggested that Dr. Chinn double check his hard work since we know little Jonny boy NEVER EVER does the real work. Then again – I looked the data myself but that lying POS Jonny boy has been saying I never provide the actual data. I guess he is thinking of his own laziness when he falsely accuses me this way. But that’s OK – I have known for a decade that little Jonny boy is the most worthless POS on the web.

  7. JohnH

    As opposed to Krugman’s simplistic assertion that labor successfully DEMANDS higher wages in tight labor markets, WTW has a more nuanced description of how Corporate America sets its wage budgets…with no mention of labor DEMANDS: “Pay is driven by changes to supply/demand for labor which can be caused by demographic trends, labor participation rates, unemployment levels, technological advances, and growth in productivity…Effective leaders carefully balance spending and program design considering both ongoing inflation concerns and long-term talent shortages. Wherever possible, they work to create strong culture and employee experiences, developing great places to work instead of driving up fixed pay costs.”

    Got it? Corporations design the compensation plans which they bestow on employees. Corporations are firmly in the driver’s seat. Although some employees have enough bargaining power to demand wages, most don’t. Most are even reluctant to ask for any pay increase, much less demand one.

    Yet economists insist on perpetuating the ivory tower myth that labor can drive a wage-price spiral by DEMANDING higher wages. I’d love to see a contemporary survey where economists asked workers about whether they demanded wage increases and how successful their demands were. So far nobody has come up with anything to substantiate the claim that workers DEMAND wage increases.

    1. baffling

      “I’d love to see a contemporary survey where economists asked workers about whether they demanded wage increases and how successful their demands were.”
      a fair proxy would be to examine how many workers change jobs that result in a higher wage. this is effectively the same thing as you are asking, Johnny. and I believe this issue has already been discussed by macro duck. why do you keep repeating questions that have already been answered for you?

      1. pgl

        Glad you are replying to this as I have grown bored with Jonny boy’s rants that are not supported even by his own damn links.

  8. pgl

    Could someone please telling little Jonny boy to stop embarrassing his own mother. He lectures Macroduck for not reading his link which was written almost 6 years ago. Now Macroduck has read this blog post. So have I. It really is not that great and it certainly does not support Jonny boy’s incessant lies.

    One more plea to our host – ban this lying disgusting worthless little troll. His agenda is to destroy this blog the way this jerk ruined Thoma’s blog.

  9. pgl

    Wow – after wasting our time with his stupid rants relying on a 2/2018 blog post and letting people like me do the hard work, little Jonny boy FINALLY decides to plot ECI against some measure of the price level. Had this lazy moron done this in the first place, we would saved so much time. But it’s Jonny, the dumbest, most dishonest, laziest troll ever.

    Now look at his reply to James who said his billing rates have followed nominal ECI. James may be a consultant or a lawyer I’m not sure. But he is not someone who is running a factory. But Jonny boy wants to know if the workers hired by James have demanded a pay increase. Seriously little Jonny boy – are you really that STOOOPID?

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