And an update to that ad on Friday showed wages rose 0.4 percent in October, roughly in line with recent monthly price hikes. In the past year this figure has increased by 4.9 percent. But hourly earnings data have been skewed by the pandemic as low-wage workers who quit the labor market in early 2020 are now trickling back in, driving the average up.
The result is that the tug-of-war between price increases and wage increases does not yet have to swing decidedly in favor of the workers.
Whether wage increases ultimately eclipse inflation – and why – will be decisive for economic policymakers. Central bankers celebrate rising wages when they stem from productivity gains and strong labor markets, but would worry if wages and inflation seem to be driving each other up.
The Federal Reserve is “watching carefully” for a worrying rise in wages, its chairman Jerome H. Powell said Wednesday, despite noting that the central bank does not see such a trend emerging.
Recruiters report some early signs that inflation is influencing salary decisions. Bill Kasko, president of Frontline Source Group, a Dallas recruiting and recruiting firm, said that faced with rising gas prices, employees are demanding either higher wages or options to work from home to offset their increased commuting costs.
“That becomes a topic of conversation during salary negotiations,” said Kasko.
Today’s wage increases, however, are largely tied to another economic trend: an ardent demand for labor. Job vacancies are high, but many potential workers remain on the fringes of the job market, either because they have made the decision to retire early or because childcare issues, virus concerns, or other considerations have kept them from work.
Emily Longsworth Nixon, 27, of Dallas, is one of Mr. Kasko’s employees. She was trying to recruit a woman for an executive assistant position at a technology company who would have given her a $ 30,000 raise – and saw the candidate for a counter offer with no extra pay but three working days a week from home ran out of.
Understand the supply chain crisis
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Almost everything that is manufactured is in short supply. This includes everything from toilet paper to new cars. The disruptions go back to the beginning of the pandemic, when factories in Asia and Europe had to close and shipping companies cut their schedules.
First, the demand for household goods increased. Money that Americans once spent on experiences has been diverted to things for their home. The surge clogged the system for moving goods to the factories that needed them – like computer chips – and finished products piled up due to a lack of shipping containers.
Now the ports are struggling to keep up. In North America and Europe, where containers arrive, the strong influx of ships overwhelms the ports. With full warehouses, containers pile up in the ports. The chaos in global shipping is likely to continue due to the massive traffic jams.
“After that, I had my tail between my legs for a few days; I never thought of asking that, ”she said, adding that employers need to know their candidates like never before as workers wield their power, take away raises and other perks. “Before Covid, it was a labor-driven market.”