Pedestrians walk past a Now Hiring sign in Arlington, Virginia, on March 16, 2022.
Stefani Reynolds/AFP/Getty Images
The Employment Cost Index rose 1.4% in the first quarter of 2022, the most since at least 2001.
The uptick exceeded the 1.1% estimate and marked a pickup from the prior quarter’s 1% gain.
The report shows Americans still enjoying above-average wage growth as inflation got even hotter.
Working Americans’ wages rose the most on record through the first three months of 2022 amid intense demand for labor and historically strong inflation.
The Employment Cost Index — one of the most closely watched yardsticks for countrywide wage changes — gained 1.4% through the first quarter, the Bureau of Labor Statistics said Friday. That’s the largest one-quarter increase since data collection began in 2001.
Economists surveyed by Bloomberg held a median estimate of a 1.1% increase. The print also showed wage growth accelerating from the 1% jump seen through the fourth quarter of 2021.
The report confirms that the outsize pay gains employees enjoyed throughout 2021 continued into the new year. The months-long imbalance between worker supply and demand — informally known as the labor shortage — increased pressure on businesses to raise wages as they scrambled to rehire. The phenomenon has shown little sign of easing in 2022, with the latest data showing job openings still near record highs at the end of February.
Wage pressures could even be intensifying as the economy inches closer to its pre-pandemic job count. The latest gain exceeded the 1.3% hike seen in the third quarter of 2021, around when the labor shortage first emerged.
While wage growth has been extraordinarily strong throughout the coronavirus crisis, it’s still fallen behind inflation. Prices for common goods and services rose 8.5% in the year through March, marking the fastest inflation since 1981. By comparison, the ECI is only up 4.5% from the year-ago period, and Russia’s invasion of Ukraine has only worsened the price-growth problem in recent months.
Rising prices actually took a larger chunk out of workers’ pay than in the quarter prior. Inflation-adjusted compensation shrank 3.7% in the year through March, down from the 2.9% decline seen through 2021. Unless inflation peters out and wage growth holds strong, most employees will continue to see their buying power shrink.
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Source:: Business Insider