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Driven by labor shortages and inflation running at a 30-year high, U.S. wages will rise 3.9 percent in 2022, the biggest one-year jump since 2008’s Great Recession, the Conference Board (CB) predicted in its annual Salary Increase Budget Survey.
Last April, the board had forecast a 0.9-percent bump next year.
Already, hourly pay rates have risen 4.8 percent in the 12 months ending October 31, Business Insider noted; in the notoriously low-paid leisure and hospitality industries, wages have shot up 12.3 percent year on year.
The typical business has added 3 percent to its salary budget this year, the CB’s report found, compared to 2.6 percent in April.
This year’s pay bumps were the largest on record for employees under age 25 and also for job-jumpers; 46 percent of businesses said higher starting pay for new hires had boosted their salary budget projections.
Employers have been forced to offer higher compensation to attract workers during the “Great Resignation,” during which more than 4 percent of the workforce has quit jobs for better ones or to rethink their career paths.
Inflation, now running at a 30-year high, also has been a factor in employers’ need to pay workers more, cited by 39 percent of businesses CB surveyed.
Despite better compensation, labor shortages will continue for months, analysts told BI.
The tight labor market will likely continue through 2022, with wages increasing “well above” 4 percent next year, CB chief economist Gad Levanon said in the report.
“A wage-price spiral—where higher prices and rising wages feed each other, leading to faster increases in both—may already be in the works,” he said.
TREND FORECAST: Again, as we have detailed, wages are at least 2 percentage points below inflation, which means it is costing more to live… and the inflation to pay index will not improve next year. And, with wages remaining low, fewer people will be able to afford homes, thus the apartment and home rental market will continue to expand.
We have named labor’s comeback as a Top Trend in 2022 (“Unionization Trend on Track,” 7 Dec 2021).
That means that workers not only will use their newfound leverage to extract higher wages from employers, but also to press for better working conditions, from flexible hours and locations to health benefits to child care considerations.
“Labor power” will redefine the workplace and the power structure between workers and employers.