Two-thirds of American workers say wages are not keeping pace with inflation

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The government’s latest inflation reading, the Core Personal Consumption Price Index, showed Friday morning that prices may be softening from record levels but financial stress among workers remains as high as ever amid the strongest inflation in four decades.

Two-thirds of American workers say their salaries aren’t keeping pace with inflation, and the percentage of workers considering quitting a job is at a four-year high a new CNBC|Momentive Workforce Survey.

66% of workers say inflation has outpaced any salary increases they’ve had in the past 12 months, while 19% say their salary increases have roughly matched inflation, and 13% say their salary has increased more than inflation.

As more multi-income American workers express a frustration that economic data has signaled throughout the year – that price increases continue to outpace wage increases – the pressure is particularly high on middle-income workers. According to the survey, those earning between $50,000 and $150,000 are more likely than high- and low-income groups to say their pay hasn’t kept pace with inflation.

The online survey was conducted May 10-16, 2022 among a national sample of 9,254 workers in the United States.

While 72% of workers in the CNBC|Momentive poll say they are “well paid” or “very well paid,” that’s the lowest number in the history of the poll, while the 28% who say they aren’t get paid well doing this is an all time high.

Thirty-nine percent of workers say they have seriously considered quitting their job in the past three months, the highest since the survey began in 2019 and a 6% increase from last November.

The percentage of workers considering quitting their job hits a survey high.

CNBC|Momentive Workforce Survey

“Inflation is absolutely a driver of employee turnover right now,” said Laura Wronski, senior manager of research science at Momentive. “Workers who say their pay has outpaced inflation are least likely to say they have considered quitting their job in the past three months, and workers who say inflation has outpaced their pay increases are searching most likely after a new job. “

Recent inflation readings have raised hopes that inflation has peaked, but a drop in prices doesn’t mean high inflation is going away.

Real wage growth across the wage distribution is declining and it is middle-income workers who are worse off than they were before the pandemic – while the lowest-paid workers are seeing the largest wage increases while struggling with inflation achieved . “They’re being hit really hard by this,” said Heidi Shierholz, president of the Economic Policy Institute, which focuses on the needs of low- and middle-income Americans.

As companies like Microsoft and Apple announce pay rises for workers this month, both among employees and in Apple’s case, workers in its retail stores, where union initiatives are beginning to take off, Shierholz said workers are aware of an important data point are aware of, which frustrates them and urges them to demand more: corporate profits soar.

“We know that a large part of the rise in prices is because employers’ profits have risen sharply,” she said. “Workers are paying the higher prices and their employers are reaping the profits, and that’s just a fundamental imbalance. There is an opportunity to go higher. There is a choice. Those wins become wins and employers might make a different choice.” She said.

Quitting rates are elevated across the wage distribution, but the record rate of workers considering quitting does not directly overlap with the middle-wage shortage because the highest quitting rates are among low-wage jobs, where most vacancies exist .

“Low earners are able to change jobs and find new opportunities at higher wages. Really high-earning workers who make $150,000 or more per year are more likely to work in jobs that could increase wages the most, even if they’ve stayed in their role, they’ve seen their wages increase.” , said Vronsky.

Attrition rates in the Covid economy show the biggest spikes in low-wage sectors, including retail and hospitality, not in knowledge worker jobs, which are more middle-income focused.

“People expected a lot more workers to drop out when the big pay rises didn’t materialize, and they didn’t,” said Rucha Vankudre, senior economist at employment research firm Emsi Burning Glass.

Now is the time to receive your wage increases

Now may be the time to demand more from employers as the level of wage growth and job openings is unsustainable in the current market. Attrition rates will fall and the intense competition for workers that the labor economy is experiencing will ease as aggregate employment continues to rise.

“The closer we get to full employment, the slower job growth and job vacancies slow down,” Shierholz said.

And the further Covid advances in the rear-view mirror, the more workers will come back.

“It’s not good for the workers,” she said. “We are in this extraordinary moment of increased bargaining power for workers due to some extraordinary circumstances of the Covid recovery. These will not last.”

An economy that is adding more than 500,000 jobs each month, and for the first four months of this year as many as in most completed years of the last decade, cannot continue at this pace, and that means the ability to outsource jobs and higher wage increases to be obtained due to the high competition for labor will decline.

There will be an enduring awareness among workers that they can unite and demand more from employers, be it in terms of pay, benefits or company values. “This awareness will not simply disappear,” said Shierholz.

Recent salary increases from Microsoft and Apple are a recognition of the increased power of workers at companies with the highest profit levels on the market. But one inflationary truth that will remain is that a $22 hourly wage for a worker at an Apple retail store is a lot less in three years. “These wage increases will not be reduced, but we will still have inflation. It’s a constant thing. It’s not like we got those raises now, it’s our mission accomplished. There’s still a long way to go,” said Schierholz.

With two job offers for every worker, power stays with the worker, and economists say it’s difficult to imagine a situation where employers regain all the power that has shifted in recent years.

“We just don’t have the people to fill these positions and employers will have to give up a bit. We’ve never been here, never had so many job offers,” said Vankudre.

Employers have already become more flexible in terms of conditions such as hybrid work and the benefits and training provided, but wages are not keeping pace with inflation in real terms.

“There was an expectation that everyone [employers] would make market adjustments and that didn’t actually happen,” Vankudre said.

Meanwhile, the clock is ticking for a record job recovery.

“Now is the time to get your wage increases if you can,” Shierholz said.

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