Labor strikes are rising across industries as many union contracts are set to expire. As usual, one of the main contention points in the negotiations: Better wages.
Workers across the U.S. have been squeezed by inflation for nearly two years as the growth of their incomes couldn’t keep pace with the rapid increase in the cost of nearly everything.
As of August, the consumer price index—a weighted average of prices for a basket of consumer goods and services—has surged 16.6% from the beginning of 2021. The average hourly earnings for employees in private sectors, in contrast, only gained 13%.
Growth in hourly pay doesn’t necessarily mean workers are taking home more money. The metric is hiding a key trend in the postpandemic labor market: People, on average, have been working less hours.
From January 2021 to last month, the average weekly working hours for employees in private sectors has declined from 35 hours to 34.4 hours. That might not look like a lot, but applying the time cut to more than 133 million workers, it’s a reduction of 80 million working hours every week.
When accounting for both hourly pay and working hours, American workers’ average weekly earnings—closer to the actual money they brought home—have increased even less, only up by 11% since the beginning of 2021. That means a significant erosion in consumers’ purchasing power.
The good news is, as inflation cools, workers’ pay is catching up, rising faster than consumer prices since the summer.
September’s consumer price index, which is set to be released on Thursday, is estimated to rise 3.6% from a year ago, while the average hourly earnings for private employees climbed 4.2%, and weekly earnings by 3.6% as of September, according to latest data from the Bureau of Labor Statistics.
Still, there’s a large gap to fill and it will take time. According to personal finance website Bankrate, at the current pace, workers’ wages aren’t set to fully recover their loss of purchasing power since the start of inflation until the fourth quarter of 2024.
The pain isn’t felt equally across the job market. Among the 10 major sectors, leisure and hospitality is the only one whose income has outrun the inflation. Since the start of 2021, workers in leisure and hospitality have seen their weekly earnings grow 22%, six percentage points higher than consumer prices.
The information sector, which includes many media and telecom companies, has seen the slowest income growth of just 4.5%. It’s worth noting that information workers enjoy the highest pay among all sectors, with an average weekly earnings of $1,747 as of September. That’s three times the pay for leisure and hospitality workers—even after recent gains.
Among the more than 370 job categories tracked by the BLS, only a quarter have seen their weekly earnings grow faster than inflation.
Jobs that saw the most wage increase include bus drivers, toy wholesalers, hotel workers, and those working in media-related industries. Meanwhile, industries that saw the largest decline in weekly earnings include video and sound recording, spectator sports, information services, and performing arts.
The change in weekly income could be affected by both hourly pay and the number of working hours.
Employees in spectator sports, for example, saw their hourly earnings drop by 15% since 2021, while working five fewer hours a week on average. Combined, that’s 28% less money earned each week. Hotel workers, on the other hand, are getting paid 27% more per hour, while working two more hours a week. That’s led to a 38% jump in their weekly income.
Check out the chart below to see which jobs had the biggest pay bump since the onset of inflation.
Write to Evie Liu at evie.liu@barrons.com
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