Higher Wages Raise Spirits As Omicron Hits Economy

Number of the Day: The most relevant or interesting figure in personal finance

18

That’s how many months of the pandemic (all but three) the average hourly worker’s raise has topped pre-COVID records. 

Recent pay hikes underscore how much workers have been in demand during the pandemic recovery, and one reason why December’s employment report, showing the slowest job growth in a year, isn’t all that discouraging, according to some economists. 

The average hourly wage in December was $31.31, 0.6% more than in November and 4.7% more than a year earlier—well above the pre-pandemic record of 3.7% set in 2009, the Bureau of Labor Statistics said Friday. Indeed, every month with the exception of a three-month stretch earlier in 2021 has shown year-over-year wage growth topping that high, according to records going back to 2007.

Unfortunately, these wage increases haven’t kept up with inflation, now at a decades-high 6.8% rate. But workers have made up for it by working longer hours. When those extra hours are taken into account, worker pay has increased 9.9% in the past year, according to an analysis by economists at FT Advisors.

“There is more leverage on the side of the workers right now,” said Daniel Zhao, senior economist and lead data scientist at Glassdoor. “This is a good time to ask for a raise or look for a job.” 

Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.

Article Sources

  1. Wells Fargo Securities. “Both Presents and Coal in the December Employment Report.” Accessed Jan. 7, 2022.

  2. CIBC. “US Employers Still Challenged To Fill Jobs in December.” Accessed Jan. 7, 2022.

  3. Bureau of Labor Statistics. “Employment Situation Summary Table B. Establishment Data, Seasonally Adjusted - 2021 M13 Results.” Accessed Jan. 7, 2022.

  4. FRED Economic Data. “Average Hourly Earnings of All Employees, Total Private.” Accessed Jan. 7, 2022.

  5. First Trust Advisors. “December Employment Report.” Accessed Jan. 7, 2022.