A Report released on Friday December 3, showed that the wages in the U.S continue to rise especially in sectors with labor shortages. The labor department said that the report indicated increased payrolls and the declining unemployment rate. Average hourly earnings were also higher in November compared to a year ago. Wages were highest for leisure and hospitality followed by transportation and warehousing. These two sectors were affected the most by pandemic due to labor shortages. As wage growth is increasing, it could ease inflationary pressure in the coming months because the cost of wages constitutes a big chunk of the economy. The wage growth is being observed by the Federal Reserve, as it can be a predictor of future inflation and to prevent wage-price spiral – employees demand raises because their earnings have gone down relative to their cost of living- and the high labor costs are then passed to the consumers in the form of price increases, which can cause inflation. According to Fed Chairman, high energy prices and increasing rents can keep inflation elevated. The Increasing wages are bringing workers back into the workforce and as a result the labor participation rate in November was 61.8 percent.
https://www.wsj.com/articles/worker-wages-continued-to-rise-for-services-shipping-jobs-11638557999
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