Most American workers have been receiving pay increases that exceed the rate of inflation in recent months, but the average hides the outliers, and a growing proportion see their salaries frozenas shown by the data from the Federal Reserve Bank of Atlanta.
More than 12% of workers have not received a raise in the last 12 monthsthe most in more than two years, according to the Atlanta Federal Reserve's Wage Growth Tracker, which measures the distribution of wage increases as well as the average.
According to a smoothed measure, the proportion of the workforce that is experiencing a wage freeze It is increasing at the fastest rate since 2010.
The backdrop is a slowing inflation rate, which is easing pressure for wages to keep up with the cost of living. There is now more optimism that the Federal Reserve can control inflation without triggering a recessionwhich would be good news for workers because, along with job losses, wage freezes also became more frequent in the last two economic crises.
At the upper end of the distribution of the Atlanta Federal Reserve, More than a quarter of workers saw their pay increase by at least 16% in the 12 months to January.
Many of the huge increases are concentrated in high-demand professions like nursing, says Giacomo Santangelo, an economist at Monster, a service that connects people with available jobs. He sees a disparity in labor demand, which is increasingly focused on groups with specialized skills.
“Despite recent wage growth, This gap exacerbates financial pressure on workers and consumers overall.”says Santangelo.
Atlanta Federal Reserve wage data is based on measures of the nominal wage growth of the same individuals over a 12-month period.
Negotiated wages in the eurozone increased 4.5% at the end of 2023according to him European Central Bankwhich calmed fears that rising wages could keep inflation above the target.
Although it is still high, the wage increase in the fourth quarter is lower than the maximum of 4.7% that the eurozone recorded in the previous three monthsaccording to the index of negotiated wages published on Tuesday by the European Central Bank.
The indicator – which shows possible wage pressures by processing data from non-harmonized countries – this time was more expected than normalas bankers in Frankfurt are more focused on labor costs as a key factor in deciding when to cut interest rates.
Many, however, are even more interested in seeing the numbers for the first quarter of 2024.which will be published in May, before implementing an easing of monetary policy.
“This slowdown in wage growth observed at the end of last year should bring some relief so that the feared wage-price spiral does not develop in the eurozone”said Carsten Brzeski, global head of macroeconomics at ING.
Indeed's tracker found that wage growth in December was slower than three months earlier in nearly four in five occupations. In turn, consumer price inflation rates have fallen faster than the rate of wage growth.. That means many workers – who were struggling to keep up with the cost of living despite receiving higher pay increases – are now getting ahead. The real average hourly wage indicator has been positive in recent months.
