Workers’ Earnings Growth Exceeds Inflation for First Time in 2 Years

U.S. workers’ median weekly earnings have grown faster than inflation over the last year.

The usual weekly earnings of full-time wage and salary workers in the first quarter were 6.1% higher than they were a year earlier, while the Consumer Price Index for all urban consumers rose 5.8% over the same period, the Bureau of Labor Statistics (BLS) said in a Tuesday (April 18) press release.

During the first quarter, the usual weekly earnings of these workers reached $1,100, according to the release.

This marks a turnaround from the last two years, in which wage gains had been running slower than inflation increases, Bloomberg reported Tuesday.

Now, companies are still offering higher pay to recruit and retain workers during the current labor shortage, even as inflation has been slowing, according to the report.

The faster pace of earnings growth could lead the Federal Reserve to increase interest rates again when the policymakers meet in May, the report said.

For Main Street small and medium-sized businesses (SMBs), the continued wage growth could mean pain ahead.

As PYMNTS reported April 7, wage growth indicates that companies have to keep boosting wages to keep talent on board, battle inflation and bring applications in for roles that are open.

Four in 10 Main Street SMBs said inflation was their top challenge as they head into 2023. Inflation includes not only the prices of the raw materials and the finished goods that line the shelves of these SMBs, but also the operational cost of staffing the businesses themselves.

At the same time, nearly two-thirds of consumers say they’re working jobs that don’t meet their annual salary requirements — and 30% of those consumers say they plan to leave their current role for a new one.

Switching jobs is how many consumers have been able to jump-start their take-home pay. But while 62% of consumers are dissatisfied with their earnings, only one-third think they could successfully switch jobs and find a new position that would both meet their qualifications and satisfy their wage demands, according to “New Reality Check: The Paycheck-to-Paycheck Report: The Employment Edition,” a PYMNTS and LendingClub collaboration.