In the final three months of 2022, wages and benefits for workers in major U.S. cities increased at a slower pace, with inflation still outstripping pay for many workers.
The Labor Department reported on Tuesday that the employment cost index, a quarterly measure of labor costs, climbed 1% in the October-December period. It is not close to the 1.2% reading in the third quarter and the 1.1% forecast by Refinitiv economists. It is the lowest quarterly gain in a year.
In the 12 months to December, wages and salaries increased by 5.1%. Millions of Americans saw their pay increase wiped out by the steep consumer prices last year, as compared to a final year-end inflation rate of 6.5%.
Kathy Bostjancic, the chief economist at Nationwide, said that the core private wages and salaries advanced slowed for the second consecutive quarter, which is consistent with the deceleration in other wage measures, including average hourly earnings. Benefit costs went to the slowest level in over a year, allowing the year-on-year rate to slip to below 5% to 4.9%. While wage growth is moderate across most of the country, there is still some differences in compensation.
Miami saw wages grow by 6.8%, well above the national trend, which has been a hotbed for inflation. The inflation rate is lower than the local inflation rate of 9.9%, according to the government data.
The Seattle region saw the second-highest increase in wages, which was up 6.2% in the fourth quarter. It was a marked increase from mid- 2021, when wages in Seattle grew at a 2.4% annual pace. Local inflation, which hovered around 8.4% in December, wiped out those increases.
The only region where inflation did not erode wages was Los Angeles. Wages increased 5.9%, compared to the local inflation rate of 4.9%, for an adjusted pay increase of 1%.
The metro with the biggest discrepancy between wage increase and inflation, where workers suffered the biggest blow to their pay, was in Phoenix. The city saw a 5% increase in wages, compared to a 9.5% increase in inflation for a total pay cut of 4.5%.
Atlanta had an annual wage growth of 4.8% and an annual inflation rate of 8.1%.