Employers hire again – but who pays wages that follow inflation and who does not?

Inflation is as warm as the labor market, but the job report from March showed that there are not many jobs where wage growth resists heated prices.

That is, with a few exceptions – which may indicate a lot about where consumer demand goes when pandemic concerns disappear.

In a healthy-looking job report that showed the economy added 431,000 jobs, the average hourly wage rose to $ 31.73. That’s a 5.6% increase in average hourly wages from the same time last year, the Bureau of Labor Statistics said Friday.

Make no mistake, an increase of 5.6% is robust.

In fact, workers must look back to the early 1980s, except for quick moments early in the pandemic, to find such large increases from year to year. The growth in hourly wages was 0.4% from February to March.

However, prices are rising even faster, according to commonly monitored inflation indicators.

The consumer price index reached 7.9% in February, and some economists worry that it will go even higher in March figures, which will capture the ripple effects of Russia’s invasion of Ukraine.

Another price gauge that the Federal Reserve favors, the personal consumer price index, reached 6.4% in February, according to data this week.

In this context, there are only a handful of sectors where wage growth year-on-year, at least for the March jobs report, keeps pace with inflation:

• In transport and warehousing jobs, the growth rate in hourly wages year-on-year was 7.9%. These workers, who pay an average hourly rate of $ 27.79, have been in need of booming e-commerce sales and supply chains trying to uncover. March jobs for this sector were “essentially unchanged” after major 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 staff staff, accounting for about a quarter of all job increases in March, paying an average of $ 19.68 per hour in March. The sector has still fallen by 1.5 million workers from before the pandemic, according to figures from the Labor Department.

Use the Fed’s preferred measure of inflation, with its 6.4% read in February, and a few other places stand out.

• Retail jobs saw an average growth in hourly wages of 6.5%, paying an average of $ 22.89 per hour. This sector includes work in everything from grocery stores to gas stations, clothing, hardware and more. In March, retail employers employed 49,000 more people.

• Jobs in “professional and business services” had an increase of 6.6% and paid an average of $ 38.18 per hour. In March, this sector – covering all types of salaried work from accountants and lawyers to call centers and administrative staff – added 102,000 jobs.

“Apart from jobs, the key figure in this report is the modest 0.4% decline in average hourly earnings, which rose by just 0.1% in February. A soft print, out of the blue, is easily dismissed as noise, but “Two are harder to ignore; three would be definitive, so the April figure is now hugely important,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note.

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

“Without sustained rapid wage growth, a rise in inflation cannot become a spiral,” Shepherdson wrote.

The latest report showed strong job growth, but there are drawbacks and they will not be borne equally, according to Dawit Kebede, senior economist at the Credit Union National Association.

“Continued increase in wage growth will lead to more price increases as companies pass on these costs to consumers. This is affecting low-wage earners who are already struggling to cope with rising consumer prices. “

“People are making more money, they are finding better jobs and – after decades of being mistreated and underpaid – more and more American workers now have real power to get better pay and to do what’s best for them. even and
their families, President Joe Biden said Friday.

His Republican critics note that it is not so simple that it is hammering on wages being gnawed by inflation – and government policies, which, they say, are part of the problem.

Rep. Jim Baird, from Indiana, tweeted“There is very little relief for workers as inflation continues to exceed wage rates, and until Democrats adopt fiscally responsible policies, the American people will continue to suffer.”

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