The average American worker experienced record-high pay increases in 2022, whether they stayed in their current position or changed companies and jobs.
New data shows that in November 2022, those who stayed on saw a wage increase of 5.5 percent compared to November 2021.
The Federal Reserve Bank of Atlanta also said employees who switched companies saw gains of 7.7 percent year over year.
While the growth means more money in the pockets of American workers, the increases are also driving up inflation, experts say.
New data shows that in November 2022, those who stayed on saw a wage increase of 5.5 percent compared to November 2021
The Federal Reserve Bank of Atlanta also said employees who switched companies saw gains of 7.7 percent year over year
The wage increase for those who stayed in their jobs rose from 3.2 percent in January 2022, for an overall increase of 1.8 percent.
Job changers recorded an increase of 3.4 percent from November 2021 to November 2022.
Experts say the opportunity to earn a higher income at another company prompts companies to raise wages for their current employees.
Layla O’Kane, an economist who spoke to the Wall Street Journal, said that easy applications and numerous job openings tempt employees to switch.
“When I see that Burger King down the street is $22 an hour and I’m making $20 an hour at Dunkin’ Donuts, where I work, I know very well what my opportunity cost is.” O said Kane.
“Employers are responding and saying, ‘Well, we’re going to raise wages internally because we don’t want to lose our already trained employees.’
But not all employees saw an increase.
Wages for employees in the private sector fell by 1.9 percent in November 2022, adjusted for inflation.
Layla O’Kane, an economist who spoke to the Wall Street Journal, said easy applications and numerous job openings tempt employees to switch
“When I see that Burger King down the street is $22 an hour and I’m making $20 an hour at Dunkin’ Donuts, where I work, I know very well what my opportunity cost is.” O said Kane
However, wage growth contributes to inflation.
While inflation eased slightly in the later months of 2022, the US saw record high rates earlier in the year.
In November, US inflation was 7.1 percent.
The still-high figure marked the fifth consecutive month of contracting annual gains.
Wages for employees in the private sector fell by 1.9 percent in November 2022, adjusted for inflation
The latest payroll data comes as two-thirds of economists at the largest US financial institutions believe a recession will hit in 2023
The latest payroll data comes as two-thirds of economists at the biggest US financial institutions believe a recession will hit in 2023, according to a new survey.
The Wall Street Journal poll of 23 primary dealers, the big financial firms that do business directly with the Federal Reserve, found that a majority expect a recession in the coming year.
Key economic concerns included dwindling personal savings, the contraction in the housing market and tightening lending standards at many banks.
It follows the Fed’s rapid rate hikes to combat rising inflation last year, which saw the federal funds rate rise from near zero in March to a range of 4.25 percent to 4.5 percent by the end of the year.
A majority of economists at the biggest banks, including Bank of America, Barclays and UBS, are predicting a recession in 2023 amid mounting warning signs
Soaring prices have forced consumers to quickly spend savings that have skyrocketed during the COVID-19 pandemic
The Fed quickly hiked rates in 2022 to fight inflation, increasing recession risks
The central bank forecasts it will reach a range of 5 percent to 5.25 percent by the end of 2023. Their forecast calls for no rate cut before 2024.
The Fed’s interest rate is now at its highest level since the 2008 recession as the central bank looks to lower inflation without triggering an economic downturn.
According to the Fed’s preferred measure, inflation is still nearly three times its 2 percent target after rising at the fastest pace in 40 years in early 2022.
Rising prices have forced consumers to quickly spend their savings, which have skyrocketed during the COVID-19 pandemic thanks to stimulus measures and a slowdown in spending.
The consumer price index rose in 2022 at its highest rate in 40 years