Workers’ compensation is in an uphill battle with inflation
And an update to that gauge, slated for release in the jobs report on Friday, is expected to show wages rose 0.4% in October, roughly in line with recent monthly price increases. But data on hourly earnings has been skewed by the pandemic, as low-wage workers who left the workforce in early 2020 are now returning, tilting the average.
The result is that the tug-of-war between price increases and wage increases has not yet turned decisively in favor of workers.
Whether wage gains eventually eclipse inflation – and why – will be crucial for economic policymakers. Central bankers celebrate rising wages when they come from increases in productivity and strong labor markets, but would be concerned if wages and inflation seemed to push each other up.
The Federal Reserve is “watching carefully” a worrying increase in wages, its president, Jerome H. Powell said Wednesday, while noting that the central bank had not seen such a trend emerge.
Recruiters are reporting some early signs that inflation is factored into salary decisions. Bill Kasko, president of Frontline Source Group, a job placement and recruiting company in Dallas, said that as gasoline prices rise in particular, employees are demanding either higher pay or work options. home to compensate for increased transportation costs.
“It is becoming a topic of discussion in salary negotiations,” Kasko said.
But for the most part, today’s wage gains are tied to a different economic trend: a searing demand for workers. Job offers are plentiful, but many job applicants remain on the margins of the labor market, either because they have chosen to retire early, or because of childcare issues, viruses or other considerations deterred them from working.
Emily Longsworth Nixon, 27, from Dallas, is one of Mr. Kasko’s employees. She tried to recruit a woman for an executive assistant position at a tech company that would have given her a raise of $ 30,000 – and saw the candidate walk away for a counter offer with no extra pay but three days working from home every week.
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“After that, I had my tail between my legs for a few days; I never thought of asking for this, ”she said, adding that employers need to know their candidates like never before, as workers use their power, receiving pay increases and other benefits. . “Before Covid, it was an employer-driven market. “