Workers who keep their jobs are receiving the biggest pay increases in decades as companies compete to keep a limited number of employees.
Salaries for employees who stayed in the same job rose 5.5% in November from a year earlier, according to new data from the Federal Reserve Bank of Atlanta. That’s up from 3.7% in January 2022 and the biggest increase since the bank started tracking payroll data 25 years ago.
Meanwhile, workers who changed jobs saw even bigger gains of 7.7% in November, according to the Atlanta Fed.
The extremely tight labor market has allowed workers to quit their jobs in favor of better wages, working conditions and working hours – a new trend dubbed the “great quit”. The Labor Department reported last month that employers had 10.3 million job openings at the end of October, meaning there are about 1.7 jobs posted for every unemployed person.
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Number of jobs available exceeded 10 million for 12 consecutive months; before the start of the pandemic in February 2020, the highest record was 7.7 million.
The concern of some economists is that rising wages are keeping pressure on stubbornly high inflation, which soared 7.1% in November from a year earlier, according to the Labor Department.
“The labor market remains tight and overheated,” said RSM chief economist Joe Brusuelas. “Competition for labor within a currently shrinking workforce is supporting higher wage gains, fueling high inflation across the economy and in the service sector. .”
Despite wage increases — and the possibility of a record rise in 2023 — headline inflation is still wiping out the majority of Americans’ paychecks.
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The Labor Department said average hourly wages for all employees actually fell 1.9% in November compared to the same month a year ago, given the impact of rising house prices. consumption. On a monthly basis, the average hourly wage increased by 0.5% last month taking into account the monthly inflation peak of 0.1%.
By this measure, the typical American worker is actually worse off today than a year ago, even though nominal wages are rising at the fastest rate in years.
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Searing inflation has created severe financial pressures for most American households, which are forced to pay more for daily necessities like food and rent.
The burden is borne disproportionately by low-income Americans, whose already stretched paychecks are being hit hard by price increases.