Employers are hiring again, but which ones are paying wages that keep up with inflation and which ones aren’t?

Inflation is hot as is the labor market, but the March jobs report showed there aren’t many jobs where wage growth will withstand high prices.

That is, with a few exceptions, which may indicate a lot about where consumer demand is headed as pandemic concerns fade.

In a healthy-looking jobs report that showed the economy adding 431,000 jobs, average hourly earnings increased to $31.73. That’s a 5.6% increase in average hourly earnings from the same point last year, the Bureau of Labor Statistics said Friday.

Make no mistake, a 5.6% increase is solid.

In fact, the workers you need to look back to the early 1980s, plus quick moments early in the pandemic, to find such large year-over-year increases. Hourly earnings growth was 0.4% from February to March.

However, the prices are rising even fasteraccording to widely observed inflation indicators.

The Consumer Price Index reached 7.9% in February, and some economists worry that the March figures will rise further and capture the domino effect of the Russian invasion of Ukraine.

Another price indicator favored by the Federal Reserve, the personal consumption price index, reached 6.4% in February, according to this week’s data.

Against that backdrop, there are only a handful of sectors where, at least for the March jobs report, year-over-year wage growth keeps pace with inflation:

• In transportation and warehousing jobs, the year-over-year growth rate of hourly earnings was 7.9%. Paying an average hourly rate of $27.79, these workers have been much needed with ecommerce sales are booming and supply chains trying to unravel. March jobs for this sector were “essentially unchanged,” after big gains in February and January, the Bureau of Labor Statistics said.

• In leisure and hospitality jobs, year-on-year growth was even higher, at 11.8%. Hotels, restaurants and bars continued to hire staff, accounting for about a quarter of all March job gains and paying an average of $19.68 an hour in March. The sector still has 1.5 million fewer workers than before the pandemic, according to figures from the labor department.

Apply the Fed’s preferred measure of inflation, with its 6.4% reading in February, and a couple more points stand out.

• Jobs in retail trade saw average hourly earnings growth of 6.5%, paying an average of $22.89 per hour. This sector includes work in everything from supermarkets to gas stations, clothing, hardware and more. In March, retail business owners hired an additional 49,000 people.

• Jobs in “business and professional services” increased 6.6%, paying an average of $38.18 per hour. In March, this sector, which encompasses all kinds of white-collar work from accountants and lawyers to call centers and administrative staff, added 102,000 jobs.

“Jobs aside, the key figure in this report is the modest 0.4% rebound in average hourly earnings, which were up just 0.1% in February. A soft impression, out of nowhere, it is easy to dismiss as noise, but two is harder to ignore; three would be final, so the April number is now very important,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note.

In times of high inflation, the concern is that a nasty feedback loop will develop, where high costs push wages up, leading to even higher prices and higher wages in what is called a “wage price spiral”.

“Without rapid and sustained wage growth, an inflation spike cannot spiral,” Shepherdson wrote.

The latest report showed strong job growth, but there are downsides, and they won’t be taken for granted, according to Dawit Kebede, a senior economist at the National Association of Credit Unions.

“The continued increase in wage growth will lead to more price increases as companies pass these costs on to consumers. This affects low-wage workers who are already struggling to make ends meet with price increases on general consumer items.”

“People are making more money, finding better jobs, and after decades of being mistreated and paid very little, more and more American workers now have real power to earn better wages and do what is best for themselves and their families.
their families”, president Joe Biden said on Friday.

His Republican critics point out that it’s not that simple, that wages are affected by inflation and government policies, which they say are part of the problem.

Representative Jim Baird of Indiana tweeted“There is little relief for working people as inflation continues to outpace wage rates, and until Democrats adopt fiscally responsible policies, the American people will continue to suffer.”

Previous post Louisiana Homeowners Insurance Market Crashes Under the Weight of 600,000 Claims | News
Next post These 3 Painfully Obvious Mistakes Are 401(k) Killers | Smart Switch: Personal Finance
%d bloggers like this: