The Federal Reserve has been closely monitoring wage growth as it relates to inflation concerns. While wage gains have slowed, they have been consistently outpacing inflation for nearly a year now. This trend indicates that individuals are finding it easier to manage the rising cost of living compared to previous years when price hikes eroded wage increases. Additionally, wages have remained above pre-pandemic levels, offering some stability in the current economic landscape.
According to data from the Bureau of Labor Statistics (BLS), economists anticipate that average hourly earnings will maintain a steady annual growth rate of 3.9%. This figure represents a 0.9 percentage point increase from February 2020, highlighting the ongoing recovery in wage levels.
Despite these positive indicators, there are concerns that wage gains are not decelerating at the desired rate to help curb inflation. The Federal Reserve is keen on moderating wage growth to address inflationary pressures effectively. The deceleration in pay raises suggests that workers may be losing some of the bargaining power they had gained in the aftermath of the pandemic.
