Wages rose at a rapid pace throughout the year through March, another sign that labor shortages are prompting employers to raise wages to retain and attract workers.
Wages have increased by 5.6 percent in the past year, a much faster pace than the 2 to 3 percent annual wage increases that were common in the 2010s. Wages rose 0.4 percent compared to the previous month.
A rapid pay rise is a sign that employers are competing for a finite pool of workers. There are about 1.8 job openings for every unemployed worker, and companies complain that they struggle to hire people in a variety of skills and sectors.
Over the past year, wages have risen most markedly for leisure and hospitality workers, up 14.9 percent, while transportation and warehousing workers have also received double-digit wage gains. Those numbers are for employees who are not supervisors.
Between February and March, wages in the leisure and hospitality industry again rose significantly, while workers in the financial and durable goods industries also saw a significant increase in wages.
While rapid wage growth is a boon for many workers, it is complicated by — and worrying about — rapid inflation. Employees find that their paychecks, while greater, no longer buy as much. At the same time, rapid wage increases may prompt some employers to raise prices while trying to pass on higher labor costs to their customers.
“The promise of rising wages is a great thing,” Federal Reserve chairman Jerome H. Powell said after the central bank’s decision last month to raise interest rates to cool the economy. But the increases “run at levels well above what would be consistent with 2 percent inflation, our target, over time.”
With the March numbers, wages are rising over the course of the year even faster than when Mr Powell made his comment.