What you're not hearing about the collapse in real earnings

The decline of 3.4% in real hourly earnings since the beginning of the recovery from the pandemic depression is raising concerns about stagflation -- a condition in which real wages are insufficient to bring workers back into the labor force to resolve the supply-side problems that gave rise to the present inflation and are keeping it from being transitory. Measured from just before the depression, real earnings are actually up 2.6%. These measures are distorted by the huge fluctuation in the employment of leisure and transportation workers, who by leaving the labor force in the depression made average wages appear higher -- and by returning in the recovery, are making them appear lower. Data has insufficient resolution to filter out this effect. But put in longer contexts, even just five years, real earnings are still above trend, offering a strong incentive for 1.5 million unemployed to come back to work.