WASHINGTON, Oct. 30 (BUS) – Wages in the three months ending in September jumped by the most in records dating back 20 years, stark evidence of workers’ growing ability to demand higher wages from companies desperately seeking to fill a nearly-record number. Available jobs, the Associated Press (AP) reported.
The Labor Department said Friday that wages increased 1.5% in the third quarter. That’s a sharp rise from 0.9% in the previous quarter. The value of benefits rose 0.9% in the July-September quarter, more than double the previous three months.
Workers gained the upper hand in the labor market for the first time in at least two decades, and they receive higher wages, more benefits and other perks such as flexible working hours. With more jobs available than unemployed, government data shows, companies have had to work even harder to attract employees.
Rising inflation is eroding some of the wage increases, but overall wages in recent months have been keeping pace with rising prices. Economists said the 1.5% increase in wages and salaries in the third quarter came before inflation increased by 1.2% during that period.
However, compared to last year, it’s a closer call. In the year to September, wages and salaries rose 4.2%, also a record increase. But the government also reported on Friday that prices rose 4.4% in September from the previous year. Excluding the volatile food and energy categories, inflation was 3.6% last year.
Jason Furman, President Barack Obama’s former chief economic adviser, said Friday that inflation-adjusted wages are still tracking the pre-pandemic level, given the big price jumps that occurred during the spring and summer of new and used cars, furniture and airlines. tickets.
Whether inflation fades in the coming months will determine how much benefits workers get from higher wages.
Many economists expect inflation to slow slightly, while wages will likely continue to rise.
Wages rise much faster in recovering from a pandemic recession than in recovering from the Great Recession of 2008-2009, when wage growth continued to slow until a year after that downturn ended. This is because of the different nature of the recession and the different policy responses.
There was a lot more government stimulus during and after the pandemic recession than in the previous period, including the $2 trillion fiscal support package that former President Donald Trump signed in March 2020 and the $1.9 trillion aid approved by President Joe Biden in March. Both packages introduced stimulus checks and boosted unemployment benefits that increased spending.
Low-wage workers saw the biggest gains, with salaries for employees in restaurants, bars and hotels up 8.1% in the third quarter of the previous year. For retail workers it jumped 5.9%.
Mike Konzal, director of the left-leaning Roosevelt Institute, said the health increase for disadvantaged workers “is the result of specific policy choices to give workers a better bargaining hand and to ensure the economy recovers faster.” “The fact that this happened is very unique.”
Konzal said stimulus checks and an additional $300 a week in unemployment benefits, which expired in early September, have given the unemployed more leverage to demand higher wages. In addition, the Federal Reserve’s low interest rate policies helped stimulate more spending, and increased demand for workers.
In August, there were 10.4 million jobs available, down from 11 million in July, the most in two decades.
Millions of Americans are responding to higher wages by leaving their jobs for better-paying jobs. In August, nearly 3% of American workers quit their jobs, a record number. And the rising number of resignations means companies have to raise wages to retain their employees.
Workers who change jobs are seeing some of the steepest gains in income in decades. According to the Federal Reserve Bank of Atlanta, job creators in September saw a 5.4% increase over the previous year. That’s up from just 3.4% in May and the biggest increase in nearly 20 years. For those who stayed in their jobs, wages rose 3.5%.
Esther Cano, 26, is one of those who found a new, higher paying job in the July-September quarter. A recent college graduate and not yet sure of her long-term career path, she left her job as a dispatcher at an HVAC company in Fort Lauderdale, Florida, to take a position at staffing agency Robert Half. I started in July and had a 10% increase.
“What I was asking for was less than they were willing to pay,” Kano said. “It was a no-brainer to that end, as well as environment, field of growth, and opportunity.”
Cano has already been promoted to a team leader position, helping to hire temporary employees working in finance and accounting.
Most economists expect strong wage gains to continue for the coming months. Data from job listings Indeed Indeed shows that employers are still posting huge numbers of available jobs.
Higher wages can fuel inflation, as companies raise prices to cover their increased costs. But this is not the only way companies can respond. Lydia Bosor, an economist at Oxford Economics, points out that corporate earnings in the April-June quarter were at their highest level in nearly a decade. This indicates that many companies can pay higher salaries without having to raise prices.
AOQ