Inflation overtook wage growth for all but one sector in 2021 as supply shortages drove prices sharply higher.
Leisure and hospitality workers were the only ones to see inflation-adjusted pay grow last year.
Data reveals the labor shortage did little to actually help workers beat last year’s inflation surge.
US workers enjoyed the strongest wage gains in decades last year. For the vast majority, it wasn’t enough to outpace inflation.
Data published Wednesday showed inflation getting even hotter in December. Prices for consumer goods and services soared 7% year-over-year, accelerating from the 6.8% pace seen the month prior. The pace reflects the fastest year-over-year price surge in nearly four decades and adds to a months-long streak of elevated inflation.
Soaring prices butted heads with historically strong wage growth throughout last year. The labor shortage led businesses to rapidly boost pay as they scrambled to rehire. Workers enjoyed some of the biggest raises they’ve seen in decades, but for most, they still left 2021 with less buying power than they had at the beginning of the year.
Only workers in the leisure and hospitality sector saw real wages — pay adjusted for inflation — grow through last year, Insider calculated. The group enjoyed a huge pay bump of 6.2% in 2021 after accounting for soaring prices. Hotels and restaurants were among the businesses hit hardest by the pandemic and related lockdowns. As the sector has struggled to pull workers back into the fold, firms have significantly lifted wages to ensure they’ll be adequately staffed for the return of in-person service.
Professional and business services saw the second-strongest growth in real wages, but it still wasn’t enough to surpass inflation. The sector saw inflation-adjusted pay fall 0.8% in the year through December. Transportation and warehousing followed close behind with a real-wage contraction of 0.9%.
Other sectors faced massive year-over-year declines in real wages as the labor shortage did little to boost pay. The information sector saw real pay tumble by 4.3%, more than any other sector, although the industry did see a pickup in real wages in December, according to the most recent jobs report. Mining and logging followed with a 3.1% contraction, and the manufacturing sector suffered a 2.5% drop.
The broad plunge in real wages reveals just how unevenly the labor shortage has actually improved worker compensation. The increased demand from employers was heralded as a boon for workers soon after it emerged in spring 2021. President Joe Biden cheered the …read more
Source:: Business Insider