Survey: Wages Rose Again Last Quarter—But So Did Prices

Increased costs are the biggest risk to businesses, respondents say

Warehouse workers checking inventory
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Inflation persisted from July through September as both wages and prices rose again, a survey of business economists showed.

Nearly six of ten respondents reported paying higher wages in the third quarter and none reported paying less, according to the latest quarterly survey by the National Association for Business Economics. NABE calculates its Net Rising Index (NRI) by subtracting the percentage of respondents reporting “falling” results from the percentage reporting “rising” results. The NRI for wages was 58 in the third quarter, up from 51 in the second quarter, the fifth consecutive quarterly gain. 

While higher wages may sound like good news for workers, the survey also showed the NRI for prices charged rose 12 points in the third quarter to 40, the highest level in the survey’s nearly 40-year history. Inflation erodes purchasing power, diminishing the value of real wages.

The survey underscores some previously established pandemic trends. The labor shortage has made it hard for businesses to hire and keep workers, prompting them to raise wages to attract more employees. At the same time, companies are raising prices to account for the higher wages and prices paid for goods, as the supply chain remains snarled. Although a third of respondents to the NABE survey said rising cost pressures are the biggest downside risk to their businesses—with COVID-19 second at 28%—they suggested there’s a glimmer of hope that inflation could ease.

Even though no respondents in the NABE survey expected wage costs or prices charged to actually fall in the final three months of 2021, fewer respondents were expecting increases. The NRI for “expected wage costs” in the next three months dipped to 53 from 55 in July’s survey, posting the first decline since NABE’s first-quarter survey, released in April. Meanwhile, the NRI for “expected prices charged” in the next three months dropped to 40 in the latest survey, down from 42 in the previous one.

The quarterly survey interviewed 91 NABE members who work for private-sector firms or industry trade associations. The next survey, covering business conditions during the fourth quarter, is scheduled to be released in late January.

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