US wage growth ‘possibly double’ what is reported – Dallas Fed

US wage growth could be much higher than traditional indictors imply because they do not include people who move house, researchers from the Federal Reserve Bank of Dallas find.

Michael Morris, Robert Rich and Joseph Tracy use the Survey of Income and Program Participation to calculate whether wage growth would change if it included those individuals who moved residences.

They argue that leaving out movers in important surveys lowers average wage growth calculations because those who move house are also more likely to move employer.

During economic expansions, those who move job consistently experience higher average wage growth than those who do not move job, they find. In the researchers’ data set, those who move house are twice as likely to change employer as non-movers.

They find that the average wage growth for all workers is consistently higher than average individual wage growth for those who do not move house. At the end of 2018, it was 0.5 percentage points higher the wage growth for those who do not move house, sitting at 5.5%, they find.

“This 5.5% wage growth implies that, on average, US workers are currently receiving substantial real wage gains – possibly double what has been reported,” they say.

The Bureau of Labour Statistics reported average hourly earnings to have risen 3.2% from December 2017 to December 2018.