Comp News – Recent reporting has been awash with news of hourly wage workers seeing new benefits, wage increases, and sign-on bonuses as the labor market bends itself to accommodate its need for lower-income employees across various industries.

However, surging inflation threatens to outpace the gains that workers have made in compensation increases.

On the surface, the labor market seems to finally be benefitting low-income workers. Wage growth surged to the fastest pace since the 1980s through April and May. Businesses are increasingly using signing bonuses and other incentives to attract workers. And quits soared to a record high in April, suggesting Americans are confident in their chances at finding a better job.

 

But that encouraging trend is reversed – and then some – by booming inflation seen through reopening. Price growth has accelerated to its fastest one-year pace since 2008 as a wave of pent-up demand runs up against widespread shortages and production bottlenecks. After accounting for the broad upswing in consumer prices, the minimum wage is the weakest it’s been since 2008.

 

The rate of decline has also accelerated through spring, suggesting the real minimum wage could soon breach multi-decade lows.

Although an inflation surge was expected in the wake of the global economic recovery to COVID-19, the extent and power of this surge remain unknown.

Many American workers are keen to keep the increases in their compensation, even though inflation could undermine those gains if not kept in check. One alarming statistic shows the stress of inflation as it is felt – not just by workers in certain income brackets but by people in whole industries.

Despite average earnings soaring in recent months, 79% of industries are still seeing inflation outpace wage growth.

Allow us to sidestep our usual tone of professionalism to print one unfiltered thought here: Yikes.

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