The tightest labor market in decades is fueling rapid wage growth for millions of Americans, but sky-high inflation is quickly eroding those gains.
The Labor Department reported on Wednesday that average hourly earnings for all employees actually declined 2.6% in April from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings dropped 0.1% in March, when accounting for the inflation spike. By that measure, the typical U.S. worker is actually worse off today than they were a year ago, even though nominal wages are rising at the fastest pace in years.
Businesses are eager to onboard new employees and are raising wages in order to attract workers as they confront a labor shortage. There were roughly 11.5 million open jobs at the end of March – the highest on record – while the number of Americans quitting their job has also climbed to a new high. A shopper walks through the aisles of the Dollar Tree store in Alhambra, California on December 10, 2021.
But Americans are paying more for everyday necessities, with price increases broad-based in April. Food prices jumped 1% over the month, marking the 17th consecutive monthly increase for that index. The largest monthly increases were in dairy , meats, poultry, fish and eggs and cereal and bakery products .
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