CHART OF THE DAY: Wages Are Increasing Faster Than We Think

Surveys continue to indicate that employers are having a tough time finding workers with the right skills.

As such, employers are also saying that they're having to raise pay in order to attract workers from the relatively shallow pool of skilled laborers.

But economists are left asking: why aren't reported wages actually rising?

For the most part, experts look to the Bureau of Labor Statistics' average hourly earnings data for guidance. And on the surface, the numbers look sluggish.

But Barclays' Dean Maki says that the BLS's stats are a poor representation of what's really going on. He argues that by separating the wages of supervisory workers from nonsupervisory workers, you get a more useful picture of what's really going on in pay.

Here's a bit of what he wrote last week (emphasis added):

"A few years ago, the BLS created a new average hourly earnings series for all employees, not just production and nonsupervisory workers, and this has become the headline wage series. This "all employees" series increased just 1.9% y/y in April and has shown little acceleration in recent years. Because the BLS publishes the weight of the production and nonsupervisory workers (about 83%), we can back out the implied wage growth of the "supervisory workers" included in the "all employees" series. Figure 3 plots the growth rates of the implied supervisory worker series alongside the production and nonsupervisory worker series. The data suggest that supervisors are receiving puny wage increases relative to their employees; the supervisory series was up 1.3% y/y in April, compared to 2.3% for production and nonsupervisory workers. Furthermore, the data suggest this was the case for most of the past year and throughout 2007-11. Thus, these data would seem to suggest that concerns about rising inequality are misplaced, as workers have supposedly been experiencing faster wage growth than their bosses for most of the past seven years."

Maki notes that supervisory workers also receive alternative forms of compensation like bonuses and equity, which aren't captured in the BLS's measure.

As such, it's best to focus on the production and nonsupervisory worker data, which suggest wages are rising faster than we think.