Wages Are Heading Up, But They’re Not Pushing Inflation
The pay increase is nice, but it will have to be a lot higher before it contributes meaningfully to faster price growth.
Workers can’t spend what they don’t make.
Photographer: Erin Scott/Bloomberg
After decades of low wage growth, U.S. workers are finally getting a meaningful raise. Hourly wages rose 5.8% in October from a year earlier, the third highest year-over-year wage growth since the early 1980s. The employment cost index, a broad measure of wages and benefits, rose 1.3% in the third quarter, the biggest one-quarter jump since the index’s inception in 2001.
That’s good news for workers, but inflation watchers worry that higher wages will push prices higher, too. It’s not a coincidence, they say, that annual inflation is rising faster than at any point since the mid-2000s, more than double the Federal Reserve’s inflation target of 2% a year.