Wages jump by the most on records dating back 20 years
In this Sept. 22, 2021, file photo, a hiring sign is placed at a booth for Jameson's Irish Pub during a job fair in the West Hollywood section of Los Angeles. California's historic hiring slowed down in September as the state added 47,400 new jobs. California has been averaging more than 100,000 new jobs each month since February. New data released Friday, Oct. 22, 2021, by the U.S. Bureau of Labor Statistics shows California is now tied with Nevada for the highest unemployment rate in the country at 7.5%.[AP Photo/Marcio Jose Sanchez, File]
Wages and salaries jumped in the three months ending in September by the most on records that date back 20 years as companies are forced to offer higher pay to fill a near-record number of available jobs.
Pay increased 1.5% in the third quarter, the Labor Department said Friday. That’s up sharply from 0.9% in the previous quarter. The value of benefits rose 0.9% in the July-September quarter, more than double the preceding three months.
The figures demonstrate that workers are gaining greater leverage in the job market and are able to command higher pay, more benefits, and other perks like flexible work hours. With more jobs available than there are unemployed people, government data shows, businesses have been forced to work harder to attract staff.
Millions of Americans are responding to rising wages by quitting their jobs for better-paying positions. In August, nearly 3% of American workers quit their jobs, a record high. A higher number of quits also means companies have to raise pay to keep their employees.
In the year ending in September, wages and salaries soared 4.2%, also a record gain.
The wage increases are partly being fueled by an increasing willingness by workers to seek out higher-paying jobs. Workers who switch jobs are seeing some of the sharpest income gains in decades. According to the Federal Reserve Bank of Atlanta, in September job-switchers saw their pay jump 5.4% compared with a year earlier. That’s up from just 3.4% in May and the biggest increase in nearly 20 years. For those who stayed in their jobs, pay rose 3.5%.
Inflation, however, is offsetting the purchasing power of these pay gains. In the third quarter, prices rose at an annual rate of 5.3%, outpacing the boost in incomes. Excluding the volatile food and energy categories, prices rose 4.5%.