U.S. Companies Dish Out Wages Like Never Before
Private aggregate payrolls reached an all-time high even with millions of available positions. That could be a sign of impending inflationary pressure.
Overall private wages are higher than ever.
Photographer: Paul Yeung/Bloomberg
In pre-Covid times, arguably the most crucial component of the Labor Department’s monthly payrolls report for bond traders was growth in average hourly earnings. After all, higher wages suggest a tighter U.S. job market and the prospect of inflationary pressure building in the world’s largest economy.
The Covid-19 pandemic and its disparate impact on certain industries seemed to render wage data irrelevant. For instance, average hourly earnings jumped 8.2% in April 2020 relative to a year earlier, far and away the sharpest increase on record. But that was because lower-paid service workers lost their jobs and dropped out of the calculation. In last week’s report, which most analysts considered strong across the board, average hourly earnings declined month-over-month for the first time since June. With so many workers displaced and local economies reopening at different speeds, it’s difficult to get a good read from these figures.