A Now Hiring sign hangs in front of a Winn-Dixie grocery store on December 3, 2021 in Miami.
Joe Redl | Getty Images
The rapid pace of wage growth that characterized the labor market for much of the past year may be beginning to slow.
Wage growth in private sector jobs declined from 1.2% in the fourth quarter of 2021 to 1.4% in the third quarter, according to US Labor Department data released on Friday.
That pace is still fast; According to Nick Bunker, director of economic research for North America at Indeed’s Hiring Lab, this translates to about 5% annual growth for workers, which is up from the pre-pandemic trend of about 3%.
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The slowdown shows that businesses are having an easier time finding workers – and so may not feel the need to rapidly bid up wages to attract talent in 2022.
“Q4 data indicates bearishness,” Bunker said. “In combination with other data, this suggests that the breakneck pace of wage growth we saw in the summer and early fall may not be the pace we see moving forward.”
“Slowing down from 120 mph to 90 mph,” he said. “But you’re still hitting 90, which is pretty fast.”
Another recession could be unpleasant news for workers. Inflation has been running at its fastest pace in decades, largely derailed by workers.
If wage growth continues to decline while the cost of living has not, the trend could eat into their paychecks even more. However, if inflation eases in 2022 and wage growth plateaus at current levels, workers may eventually experience a net increase, Bunker said.
Is recruitment getting easier?
Demand for workers soared last year as the US economy emerged from its pandemic hibernation.
Job opportunities hit record highs as business cravings for workers outpaced the ready supply of labor. According to economists, millions of Americans have been left largely left behind by the ongoing pandemic health fears, increased home care responsibilities and early retirement among older workers. Other factors, such as higher household savings and employee burnout, also played a role, he said.
Employees also began to leave in record numbers—a trend that became known as the “Great Resignation”—as Americans reevaluated their work lives and led many to believe they could do better, higher-level jobs elsewhere. You can find paid jobs.
Recent Labor Department wage data shows that hiring challenges have eased somewhat.
“Relatively, it’s not as difficult to rent as it was for some areas in September or August,” Bunker said.
Wages for low-paying, in-person jobs in sectors such as leisure and hospitality (hotels, restaurants, bars), and brick-and-mortar retail stores have seen the biggest jump, Bunker said.
Wage growth among leisure and hospitality jobs fell to 1.4% in the fourth quarter of 2021, from 2.5% in the third and second quarters of last year, according to Labor Department data.
A separate agency report, the Job Openings and Labor Turnover Survey, shows that the hiring rate among leisure and hospitality businesses improved in November after falling for three consecutive months.
But wage growth may still be faster in some industries. Retail-trade wages, for example, rose to 2.6% from 2.6 percent in the fourth quarter and 0.9% in the third and second quarters, respectively.