Labor strikes are on the rise across industries as many union contracts are nearing expiration. Unsurprisingly, one of the primary points of contention in these negotiations is the demand for better wages.
Over the past two years, workers throughout the United States have been feeling the squeeze of inflation. The growth of their incomes has struggled to keep up with the rapid increase in the cost of nearly everything.
Since the beginning of 2021, the consumer price index—a weighted average of prices for a basket of consumer goods and services—has skyrocketed by 16.6%. In sharp contrast, the average hourly earnings for employees in the private sector have only managed to grow by 13%.
However, it is important to note that an increase in hourly pay does not necessarily equate to higher take-home pay for workers. Beneath the surface, a key trend in the post-pandemic labor market reveals that people, on average, have been working fewer hours.
Between January 2021 and last month, the average weekly working hours for employees in the private sector dropped from 35 hours to 34.4 hours. While this might not seem significant in isolation, when applied to more than 133 million workers, it translates to a reduction of 80 million working hours every week.
When considering both hourly pay and working hours, American workers’ average weekly earnings—closer to the actual money they bring home—have only seen an 11% increase since the beginning of 2021. This amounts to a significant erosion of consumers’ purchasing power.
Fortunately, there is a glimmer of hope. As inflation begins to cool down, workers’ pay is finally starting to catch up. Since the summer, wages have been rising faster than consumer prices.
According to the Bureau of Labor Statistics, September’s consumer price index is estimated to rise by 3.6% compared to the previous year. In the same period, average hourly earnings for private employees have increased by 4.2%, and weekly earnings have gone up by 3.6%.
Nevertheless, there is still a substantial gap that needs to be filled, and it will take time. According to Bankrate, workers’ wages are not projected to fully recover their purchasing power lost since the beginning of inflation until the fourth quarter of 2024.
In this ongoing battle for better wages, workers continue to fight for their fair share in an economy that is gradually rebalancing itself.
Income Growth Across Different Sectors
The impact of inflation on job earnings is not uniform across the market. Out of the 10 major sectors, only the leisure and hospitality industry has managed to outpace inflation. Since the beginning of 2021, workers in this sector have experienced a remarkable 22% growth in their weekly earnings, surpassing consumer prices by six percentage points.
On the other hand, workers in the information sector, which encompasses media and telecom companies, have observed the slowest income growth at just 4.5%. However, it is worth mentioning that information workers receive the highest pay among all sectors, with an average weekly earning of $1,747 as of September. This amount is three times higher than the earnings of leisure and hospitality employees, even after their recent gains.
When looking at over 370 job categories tracked by the BLS, only a quarter have exhibited faster weekly earning growth compared to inflation.
Certain job categories experienced notable wage increases. These include bus drivers, toy wholesalers, hotel workers, and individuals employed in media-related industries. Conversely, there are industries that have witnessed significant declines in weekly earnings, such as video and sound recording, spectator sports, information services, and performing arts.
The change in weekly income can be influenced by both hourly pay rates and the number of working hours. For instance, employees in spectator sports have witnessed a 15% decrease in their hourly earnings since 2021, accompanied by an average reduction of five working hours per week. Consequently, their total weekly earnings have decreased by 28%. On the contrary, hotel workers have seen a 27% increase in hourly pay rates, while working two additional hours per week. This has resulted in a remarkable 38% rise in their weekly income.
To get a clearer picture of which jobs have experienced the most significant pay increases during this period of inflation, refer to the chart provided below.
