On the face of it, it looks like many Americans have gotten big pay raises since the Covid-19 pandemic. started.
But in reality, only the workers of two industries – leisure and hospitality and retail – come out on top, once inflation is taken into account.
Overall wages and salaries of private sector workers increased by 4.2% between December 2019 and last June, before rising prices are factored in, according to an analysis of quarterly Employment Cost Index data by Jason Furman, professor of economics at the ‘Harvard University.
However, After controlling for inflation, paychecks actually fell 1.2% over that period, according to the analysis.
Consumer prices in the United States jumped 9.1% year over year in June, the highest level in more than 40 years, according to the Bureau of Labor Statistics.
“Workers have had more bargaining power to get higher wages, but companies have also had the power to set higher prices,” said Furman, also a former chairman of the Obama administration’s Council of Economic Advisers. . “And prices are beating wages.”
Leisure and hospitality workers, which include waiters, cooks and hotel workers, have been in high demand after being hit hard by job losses when non-essential businesses closed early of the pandemic. Their wages have risen 0.9% since December 2019, after adjusting for inflation, according to Furman’s analysis.
While the overall economy has now regained all of the jobs lost during the pandemic, the leisure and hospitality sector is still 1.2 million jobs, or 7.1%, below its February 2020 level. , according to the Bureau of Labor Statistics’ monthly jobs report, released Friday.
Retail workers, such as sales clerks, cashiers and customer service representatives, have also been courted by employers. This resulted in a 0.2% increase in inflation-adjusted wages for them. Employment in this sector is 208,000 higher than its February 2020 level.
But even employees in those industries have seen their pay rises erode this year as inflation continues to climb. Wage increases for recreation and hospitality workers and for retail employees had been 2% and 1.2%, respectively, in the two years ending December 2021.
Employers in low-wage industries have really had to raise wages in order to hire and retain the staff needed to meet demand in 2021, said Skanda Amarnath, executive director of Jobs America, which advocates for a wage economy. high and with a high employment rate.
“Right now the CPI is just too strong compared to everything else,” he said of the consumer price index, a popular measure of inflation.
Across all other industries, inflation-adjusted wages have fallen since the end of 2019, led by utility workers with a 2.7% drop.
Construction and information technology workers saw their pay slips fall by 1.8%, while workers in manufacturing and finance saw a 1.7% decline.
Even wholesale trade workers, such as truckers, who have also been strained during the pandemic as supply chains have collapsed, have lost ground. Their salaries have fallen by 0.6% since December 2019. This is a reversal from the end of 2021, when their salaries had increased by 0.1% in the previous two years.
The Employment Cost Index report is closely watched 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 inflation has remained strong. The 5.3% jump in the year ending June was the biggest since the spring of 1983.
So despite lower inflation-adjusted wages in most industries, the Fed is likely to continue raising interest rates this year in an attempt to slow rising prices, economists say.