It was back in March when we were delighted to report that we had finally solved “The Mystery Of America's Missing Wage Growth” – “mystery” because while those employees in positions of power had been abusing the availability heuristic for years, and extrapolating their own wage growth to the broader population, the reality was what we had said 5 years ago: there is simply no notable wage growth for the vast majority of the US population, period, and certainly none even remotely close to the Fed's preferred threshold of 4.5% to justify a “mission accomplished” banner.

As per our findings, this was easily explained: there was indeed a surge in wages… for supervisory workers: bosses, managers, shift leaders and the like, while non-supervisory workers had been getting the short end of the stick since 2008. The problem: non-supervisory workers account for 82% of all workers, and unless their wages also rebound, there is no hope that the US economy can even grow at anything resembling historical levels ever again.

Unfortunately, with the bulk of US labor growth focused on such sectors as bartenders and waiters, whose ranks have increase in 64 of the past 65 months…

… there simply can not be broad wage growth period.

So what does this mean for wage growth? Well, the headline number as we showed earlier is going nowhere:

But if the above is bad, it gets much worse when looking at the ugly truth which few dare to touch, and which is revealed when looking at average hourly earnings of production and non-supervisory workers (table B-8). The chart below shows why a Fed rate hike hike in the coming months virtually assures a recession: in July, wages for non-supervisory workers failed to rise once again, increasing by a paltry 1.8% Y/Y after peaking at 2.0% in late 2014. Worse, the current trend suggest the record lows of 1.3% will be revisited in the coming months.