Wages for many US employees were up between 5.5% – 7.7% in November – the highest increase in 25 years of record-keeping
Employers are afraid their workers might leave for bigger paychecks. Image: pexels.com
One of the factors contributing to historically high inflation levels is unprecedented rate of wage increases. The Federal Reserve Bank of Atlanta estimated that employees who remained at their job posts in November received an average 5.5% wage boost, while those changing jobs/occupations got even bigger raises – up to 7.7%.
Such a growth level has not been seen within the last 25 years of record-keeping. Moreover, average wage increases greatly exceeded 3.7% annual growth registered in January 2022.
The main reason is that employees need their wages to keep up with consistently rising living costs. Therefore, employers fear their workers may leave in search of greater pay opportunities. In addition, employee bargaining power has increased since the post-pandemic rebound. Namely, many employees have changed their attitude and gained more confidence to ask for wage increases.
Despite the unprecedented efforts, many employees state they haven’t felt any impact of the wage growth on their consumer potential. Prices rose at their fastest pace in 40 years in 2022, so the wage boost is practically imperceptible. Furthermore, if annual inflation level and solvency is considered, the Labor Department calculated that wages for all private-sector workers have, in fact, declined by 1.9% over the year.
Although inflation has moderated a little in late 2022, it still remains high. Fed officials are continuously monitoring wage gains as they pressure inflation further. Many companies introduce price increases to their customers to compensate for the increased labor costs.
Meanwhile, experts predict wage gains will begin to ease soon. As inflation comes down gradually, so will the need in payment boost.
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