Wages of job offers received by job seekers have spiked, with expectations for wages increasing by 11.8% from a year ago, indicating that inflation is impacting the labor market and fueling concerns about even higher inflation.
New hires are experiencing declining wages in various sectors such as technology and transportation, which could impact job hopping and take time to reflect in federal data, posing challenges for the Federal Reserve in managing inflation.
US job growth was weaker than previously projected, with a downward revision of 306,000 positions in March 2023, resulting in an average monthly job gain of nearly 312,000 over the past year, according to data from the Bureau of Labor Statistics.
The US added more jobs than expected in August, but the unemployment rate increased, indicating a looser job market and potentially relieving concerns about a hot labor market contributing to inflation.
Wage compression, where new hires are paid higher wages than long-time employees, is silently destroying companies and causing resentment among employees, according to labor expert Jason Greer.
Job growth in the US is slowing, with 187,000 jobs added in August, but this is still in line with the average over the past few years; the unemployment rate increased to 3.8% due to more people entering the labor force; the trend of workers quitting their jobs at a high rate has ended; job openings are approaching pre-pandemic levels; wage growth is slowing but still outpaces the cost of living; and jobseekers need to be proactive and competitive in their search.
Union workers across industries, including the United Auto Workers, are demanding substantial pay raises of around 50% over four to five years, citing years of stagnant wages and robust company profits, with some unions successfully securing significant wage increases that exceed the expected rate of inflation.
Wage gains for job-switchers in the US have dropped to just barely higher than those who stay in their current role, indicating that job-hopping is slowing down as the labor market slows overall.
Walmart's updated pay structure, which reduces the starting wage for certain entry-level positions, suggests a shift in the labor market and may have implications for other retailers.
British employers have reduced hiring through recruitment agencies at the fastest rate in over three years, reflecting concerns about the economic outlook, according to a survey by the Recruitment and Employment Confederation (REC), which also reported a decline in spending on temporary workers for the first time since July 2020. Starting salaries rose at the slowest pace since March 2021, highlighting the challenge for the Bank of England in managing wage growth and inflation.
Wage growth in the UK has caught up with rising prices, resulting in real pay no longer falling, according to official figures, although the unemployment rate has risen and job vacancies have fallen. The data will also impact the state pension, which is set to increase by 8.5% next April.
