Real Earnings In December 2007

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REAL EARNINGS IN DECEMBER 2007

Real average weekly earnings rose by 0.1 percent from November to December
after seasonal adjustment, according to preliminary data released today by the
Bureau of Labor Statistics of the U.S. Department of Labor. A 0.4 percent
increase in average hourly earnings more than offset a 0.3 percent increase in
the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Average weekly hours were unchanged.

Data on average weekly earnings are collected from the payroll reports of
private nonfarm establishments. Earnings of both full-time and part-time
workers holding production or nonsupervisory jobs are included. Real average
weekly earnings are calculated by adjusting earnings in current dollars for
changes in the CPI-W.

Average weekly earnings rose by 3.4 percent, seasonally adjusted, from
December 2006 to December 2007. After deflation by the CPI-W, average weekly
earnings decreased by 0.9 percent. Before adjustment for seasonal change and
inflation, average weekly earnings were $605.96 in December 2007, compared with
$578.67 a year earlier.
_____________________________



Real Earnings for January 2008 will be released on Wednesday, February 20,
2008.

Explanatory Note


The earnings series presented in this release
are derived from the Bureau of Labor Statistics¿
Current Employment Statistics (CES) survey, a
monthly establishment survey of employment, payroll,
and hours. The deflator used for constant-dollar
earnings series presented in this release is derived from
the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W).
For the purpose of the Real Earnings series,
the CPI-W is converted from the base of 1982-84 that
is used in the official, published series to a base of
1982. Thus, the constant dollar average hourly and
weekly earnings series are in 1982 dollars. To avoid
confusion for users, the CPI data presented in Table A
are the official, published CPI-W series. These data
may differ slightly from those used in the real earnings
calculations.
Seasonally adjusted data are used for
estimates of percent change from the same month a
year ago for current and constant average hourly and
weekly earnings that are presented in Table B of this
release. Special techniques are applied to the CES
hours and earnings data in the seasonal adjustment
process to mitigate the effect of certain calendar-
related fluctuations. Thus, over-the-year changes of
these hours and earnings are best measured using
seasonally adjusted series. A discussion of the
calendar-related fluctuations in the hours and earnings
data and the special techniques to remove them is
available in the February 2004 issue of Employment and
Earnings or on the Internet under 'Technical Notes'
([url]http://www.bls.gov/ces/)[/url].
Earnings series from the monthly
establishment series are estimated arithmetic averages
(means) of the hourly and weekly earnings of all
production and nonsupervisory jobs in the private
nonfarm sector of the economy. Average hourly
earnings estimates are derived by dividing the
estimated industry payroll--for all production and
nonsupervisory jobs--by the corresponding paid hours.
Average weekly hours estimates are similarly derived
by dividing estimated aggregate hours by the
corresponding number of production and nonsupervisory
jobs. Average weekly earnings estimates are derived
by multiplying the average hourly earnings and the
average weekly hours estimates. This is equivalent to
dividing the estimated payroll by the number of
production and nonsupervisory jobs. The weekly and
hourly earnings estimates for aggregate industries,
such as the major industry division and the total private
sector averages printed in this release, are derived by
summing the corresponding payroll, hours, and
employment estimates of the component industries.
As a result, each industry receives a "weight" in the
published averages that corresponds to its current level
of activity (employment or total hours). This further
implies that fluctuations and varying trends in
employment in high-wage versus low-wage industries
as well as wage rate changes influence the earnings
averages.
There are several characteristics of the series
presented in this release that limit their suitability for
some types of economic analyses. (1) The denominator
for the weekly earnings series is the number of private
nonfarm production and nonsupervisory worker jobs.
This number includes full-time and part-time jobs as
well as the jobs held by multiple jobholders in the
private nonfarm sector. These factors tend to result in
weekly earnings averages significantly lower than the
corresponding numbers for full-time jobs. (2) Annual
earnings averages can differ significantly from the
result obtained by multiplying average weekly
earnings times 52 weeks. The difference may be due
to factors such as turnovers and layoffs. (3) The series
are the average earnings of all production and
nonsupervisory jobs, not the earnings average of
"typical" jobs or jobs held by "typical" workers.
Specifically, there are no adjustments for occupational,
age, or schooling variations or for household type or
location. Many studies have established the
significance of these factors and that their impact
varies over time.
Seasonally adjusted data (table 2) are
preferred by some users for analyzing general earnings
trends in the economy since they eliminate the effect of
changes that normally occur at the same time and in
about the same magnitude each year and, therefore,
reveal the underlying trends and cyclical movements.
Changes in average earnings may be due to seasonal
changes in the proportion of workers in high-wage and
low-wage industries or occupations or to seasonal
changes in the amount of overtime work, and so on.
For more information, see Thomas Gavett,
"Measures of Change in Real Wages and Earnings,"
Monthly Labor Review, February 1972.
Information in this release will be made
available to sensory impaired individuals upon request.
Voice phone: 202-691-5200; TDD Message Referral
Phone Number: 1-800-877-8339.