Inflation spurs record decline in workers’ wages and benefits
It’s the largest decline since the Bureau of Labor Statistics began inflation-adjusted records in 2001. What’s more, it comes at a time when compensation costs — which includes the wages employers pay plus health, retirement and other benefits — are rising swiftly, before accounting for inflation, as employers try to fill positions and hold on to their staff.
The inflation-adjusted cost of wages and salaries fell 3.6%, while benefit costs dropped 4.2%, both the largest decreases since the series started 21 years ago.
“For workers, this is bad news,” Jason Furman, an economics professor at Harvard University and former chair of the Council of Economic Advisers in the Obama administration, said of the inflation-adjusted data. “Wages are falling very rapidly over the last year and are way below where they were two years ago.”
Costs rising swiftly before accounting for inflation
Compensation costs for civilian workers increased by a larger-than-expected 1.4% for the first quarter of 2022, before adjusting for inflation, according to the index. The cost of wages and salaries rose 1.2% and benefit costs jumped 1.8% from December.
Looking at the past year ending in March, the unadjusted cost of compensation soared 4.5%, compared to 4.0% for the 12-month period ending in December.
The cost of wages and salaries increased 4.7%, compared to 4.5% for the year ending in December, and benefit costs rose 4.1%, compared to 2.8%.
“What they’re concerned about is this higher inflation has persisted for so long that if it starts to seep into consumer businesses’ expectations, then that’s harder to wring inflation out of the system than just simply waiting for supply chains to correct,” she said.
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Published for: Ipodifier