According to new data from job site Indeed, U.S. wage growth has slowed sharply over the past year and is on the way to returning to pre-pandemic levels by early 2024.
The wage tracker based on salaries for job ads listed on Indeed said that salaries were up 5.3% in May compared to the same time a year ago. It is a marked drop from January 2022, when wages were up about 9.3%, indicating that employers are facing less competition for new hires.
According to the current trajectory, wage growth is expected to return to its pre-pandemic range of about 3% to 4% late this year or early in 2024.
Although the deceleration is widespread, it is most pronounced in low-wage sectors. In May, pay for the group slid to 5.6 from 12.5% at the start of 2022.
The largest slowdowns in wage growth are happening in typically lower-paying sectors, Bunker said, and it is clear that the largest slowdowns in wage growth are happening in typically lower-paying sectors. Other industries were more robust than others. The rate of wage growth in construction jobs is nearly a percentage point above its 2019 average, a notable rise given the rapid increase in mortgage rates over the past year, which has resulted in less residential and commercial development.
The inflation rate rose 0.3% in May, compared with analysts' expectations, according to the Labor Department's report released last week, which found that average hourly earnings a key measure of inflation rose 0.3% in May. Wages are up 4.3% on an annual basis in the past 12 months, the report said.
The government is closely watching wage growth as it fights fiercely high inflation with the most aggressive rate-hike campaign since the 1980s.
Policymakers approved a hike in the federal funds rate to a range of 5% to 5.25%, the highest since 2007.
Although the consumer prices index has decreased from a peak of 9.1% in June 2022, it remains about three times higher than the pre-pandemic average.