The golden age of big pay increases is ending in the United States

Fed up with inflation, the housing crisis and an overall higher cost of living, Americans will have to tighten their purse strings even further as wages threaten to return to pre-pandemic lows, according to recent data from job search engine Indeed.

Indeed’s salary tracker, based on job ads listed on its platform, showed that salaries rose 3.3% in February from a year earlier, close to their pre-pandemic pace of 3.1%.

So what’s the problem? This is a worrying slowdown in wage growth compared to 2022, when wages increased by about 9.3%.

The year-on-year wage growth trend has slowed dramatically at all levels, but Low income group employees will be worst affectedAfter experiencing significant growth in the beginning of 2022, that stood at 12.5%, well above middle-income earners (8.5%) and upper-income earners (8.2%).

The wage increase for the lower income group in February 2024 was 3.4%. In comparison, the growth rate for middle-paid employees was 3.9% and the growth rate for high-paid employees was 2.6%.

one in x threadNick Bunker, Indeed’s North American economic research director, called the wage decline “shocking” and “dramatic”, especially for people in lower income groups. “Wage increase recorded has fallen nearly 3 percentage points Over the past year,” he wrote.

new appointments calmed down

“It seems that people who change jobs will see this Further cut in salary increase, especially since resignation rates are now below 2019 levels, Bunker said, elaborating that “the continued cooling of the new hire market” is notable. “Posted salaries continue to slow, resignations are declining and hiring rates are declining. There are other ways to increase wages, but The underlying trend is downwardsHe tweeted.

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Bunker said wage growth still remains above its pre-pandemic pace, but he cautioned that “there is no certainty how long that will last.”

Real average hourly earnings of all workers overall, according to the Bureau of Labor Statistics Decreased 0.4% from January to February to US$11.11, The federal agency reported that this result stems from a 0.1% increase in average hourly earnings as well as a 0.4% increase in the consumer price index.

“After an improvement in recent reports, average hourly earnings growth is once again trending downwards and the labor market appears to be returning to the moderate trend from last year. Let’s hope it continues that way,” he noted to Indeed in early March.

unemployment rate increases

Some economists expect the labor market to remain sluggish in the coming months at current interest rate levels, which are in the 5.25% to 5.5% range. Federal Reserve raised interest rates 11 times from March 2022 In an effort to control inflation. The rapid wage growth recorded at that time could be a catalyst for an inflation crisis.

A wave of layoffs across the country is often cited among signs of a weak labor market, with big companies like Alphabet, Amazon, American Airlines, Citigroup and UPS leading the trend.

While US employers added 275,000 jobs in February, Unemployment rate increased to 3.9%According to Labor Department data.

The report paints a picture of a labor market that is largely untouched despite high interest rates, but does not appear to be reassuring about a potential rate cut.

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