Average Hourly Earnings (AHE)
Average Hourly Earnings (AHE) is a measure of the average amount of money employees make per hour. It is a key indicator of wage inflation: when AHE rises faster than productivity, it can feed through into consumer prices and add pressure to the broader inflation picture.
At A Glance#
| Field | Detail |
|---|---|
| Provider | U.S. Bureau of Labor Statistics (BLS) |
| Survey / Tool | Current Employment Statistics (CES) — also called the Establishment Survey |
| Frequency | Monthly |
| Indicator Type | Lagging |
| Main Use | Measures wage growth and wage-driven inflation pressure |
| Live Series | Trading Economics — Average Hourly Earnings |
What It Is#
Average Hourly Earnings (AHE) is a measure of the average amount of money employees make per hour. It is a key indicator of wage inflation: when AHE rises faster than productivity, it can feed through into consumer prices and add pressure to the broader inflation picture.
Who Provides It#
BLS publishes AHE through the Current Employment Statistics (CES) establishment survey, the same payroll-based survey that produces Nonfarm Payrolls (NFP).
How It Is Collected#
AHE is derived from the same establishment survey as NFP. Hours and earnings estimates cover private-sector workers only.
What goes inside the earnings figure:
- Regular pay
- Overtime pay
- Holiday and vacation pay
- Sick leave paid directly by the employer
- Commissions paid at least monthly
What is excluded:
- Irregular bonuses
- Retroactive pay
- Benefits such as health insurance and retirement contributions
- Employer payroll taxes
How It Is Computed#
BLS divides the total estimated payrolls (how much businesses pay workers) by the total estimated hours worked by all employees:
When aggregating industry-level data, BLS uses aggregate hours as weights, so industries with more paid hours have a larger effect on the overall AHE figure.
Indicator Type#
Lagging. Wages typically only rise or fall after the broader economy has already started booming or slowing down. Economists describe this as "wage stickiness": compensation does not move as quickly as hiring or output. Key reasons:
- Morale and contracts: Companies prefer to lay off 10% of the workforce rather than cut everyone's pay by 10%, because across-the-board pay cuts severely damage morale.
- The "Wait and See" approach: Early in a recovery, unemployment is still high, so companies can hire new workers without raising pay for existing staff.
- The tipping point: Only after the economy has been booming for a while — and the pool of available workers shrinks — are companies forced to raise wages to attract talent and stop current employees from leaving for competitors.
- Annual cycles: Wages are often locked in via employment contracts or annual review cycles, creating a structural delay in how quickly they adjust to macroeconomic reality.
In short: companies adjust how many people they employ today, but only adjust how much they pay those people when the market eventually forces them to.
Why It Matters#
Higher AHE signals rising worker income, but it can also signal inflation pressure. The Federal Reserve watches wage growth because persistent wage pressure can make inflation harder to reduce. For a cleaner read on compensation costs that controls for workforce composition, see Employment Cost Index (ECI).
Related Notes#
- Nonfarm Payrolls (NFP) — same CES survey; the headcount counterpart to AHE's wage measure
- Employment Cost Index (ECI) — broader, cleaner compensation measure that includes benefits and controls for workforce mix