The Great Real Wage Shock
This is kind of strange, given just how much real wages have gained. If you go to the Bureau of Labor statistics web page and look at the table "total average private hourly earnings, 1982 dollars", you can see that while real average hourly earnings were stagnant between July 2001 and July 2008, at $8.12 in 1982 dollars at both the beginning and end of that period, it soared to $8.64 in December 2008. The average real compensation during the fourth quarter was $8.50, up from $8.16 in the third quarter, a gain of 4.17% or 17.7% at an annual rate. The increase from September to December was even more dramatic, 5.5% or 23.9% at an annual rate. And in January, nominal hourly wage rose another 0.3% and while the CPI for January is not available yet, it is more likely to post another decline than an increase, meaning further gains in real wages.
What this means is that the large job losses in recent months really don't reflect so much a decline in real output, as it reflects a massive real wage shock.