Back in April, Mark and Zack wrote about how “the perceived need for a higher salary and for higher prices to withstand future inflation leads to higher prices and higher salaries.”
With hourly wages growing at some of the fastest rates on record, partly to keep up with 40-year-high inflation, that story is relevant as ever.
In addition to inflation, a competitive labor market that saw 10.3m openings in October compared to 6.1m unemployed Americans is driving wage growth.
- Four in 10 workers would consider getting a job elsewhere if it meant a 10% raise, according to a recent survey from employment agency Robert Half.
- Data from the Federal Reserve Bank of Atlanta shows job switchers have seen significantly higher wage gains in the past year than those who have stayed at their current jobs.
To account for wage increases, companies tend to pass costs to consumers through higher prices. Those prices impact consumers’ cost of living, and pressure them to seek higher wages.
Even through this wage growth cycle, with inflation at 7.1% in the 12 months ending in November, private-sector wages actually declined by 1.9%.
