But in reality, only workers in two industries, leisure and hospitality and retail, are making headway, once inflation is taken into account.
Overall, wages and salaries for private industry workers rose 4.2% between December 2019 and last June, before taking into account rising prices, according to an analysis of quarterly data from the employment costs by Jason Furman, professor of economics at Harvard University.
However, once inflation is taken into account, paychecks shrank by 1.2% during that time period, according to the analysis.
US consumer prices rose 9.1% year-on-year in June, the highest level in more than 40 years, according to the Bureau of Labor Statistics.
“Workers have had more bargaining power for higher wages, but businesses have also had power to set higher prices,” said Furman, also a former chairman of the Obama administration’s Council of Economic Advisers. “And prices are outstripping wages.”
Where wages rise
Leisure and hospitality workers, including waiters, chefs and hotel clerks, have been in high demand after being hit hard by job losses when non-essential businesses closed at the start of the pandemic Their wages have grown 0.9% since December 2019, after adjusting for inflation, according to Furman’s analysis.
While the overall economy has regained all the jobs it lost during the pandemic, the leisure and hospitality sector remains 1.2 million positions, or 7.1 percent, down below its February 2020 level, according to the Bureau of Labor Statistics’ monthly employment report, released. Friday.
Retail workers such as salespeople, cashiers and customer service representatives have also been courted by employers. This has led to a salary increase of 0.2% adjusted for inflation. Employment in this sector is 208,000 above the February 2020 level.
But even employees in those industries have seen their pay raises erode this year as inflation continues to rise. Wage increases for leisure and hospitality workers and retail employees had been 2% and 1.2%, respectively, over the two years ending in December 2021.
Employers in lower-wage industries actually had to raise wages to hire and retain the staff needed to meet demand in 2021, said Skanda Amarnath, executive director of Employ America, which advocates for a high-wage economy. and high employment.
“Right now, the CPI is too strong relative to everything else,” he said of the consumer price index, a popular measure of inflation.
And where do they fall?
In all other industries, inflation-adjusted wages have fallen since the end of 2019, led by utility workers with a 2.7% drop.
Those employed in construction and information technology have seen their payrolls drop 1.8%, while workers in the manufacturing and financial sectors have experienced a 1.7% drop.
Even wholesale trade workers such as truck drivers, who have also been in demand during the pandemic as supply chains collapse, have lost ground. Their wages have decreased by 0.6% since December 2019. This is a reversal from the end of 2021, when their salary increased by 0.1% over the previous two years.
The employment cost index report is watched closely by the Federal Reserve to monitor how much soaring inflation is pushing up wages. The data helps the Fed determine how much to raise interest rates.
But the Fed looks at wage growth before the impact of inflation, and that has remained strong. The 5.3% jump over the year ended June was the biggest since the spring of 1983.
So despite falling inflation-adjusted wages in most industries, the Fed is expected to continue raising interest rates this year to try to curb rising prices, economists say.