Latest news with #EmploymentCostIndex
Newsweek
2 days ago
- Business
- Newsweek
Four Jobs Where Wages Are Outpacing Inflation
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Wages have largely lagged behind inflation over the past few years, a shortfall attributed to a post-pandemic price surge the effects of which continue to reverberate through the economy. According to a new study by financial services firm Bankrate, inflation has risen 22.7 percent while Americans' wages have only grown 21.5 percent since January 2021. This has resulted in a current wage-to-inflation gap of -1.2 percent, meaning that income has on the whole failed to keep pace with overall price increases. Why It Matters The disparity between wages and inflation means most Americans—even those who have received bumps in their paychecks—are effectively seeing a drop in their in overall purchasing power. However, while some industries lag well behind, researchers found that certain professions have seen their pay keep up with, even outpace, price hikes since the pandemic. What To Know Bankrate drew on data from the Bureau of Labor Statistics—specifically the Consumer Price Index (CPI) and Employment Cost Index (ECI)—to measure sector-specific wage growth against inflation since 2021, and found that four industries have seen wages rise faster than prices over this period. Earnings in the accommodations and food services category have risen the fastest since 2021, climbing 27.5 percent and exceeding inflation by 4.8 percent. Next is leisure and hospitality, where wage growth has created a 4.1 percent lead over inflation. Health care and social assistance follows with a 1.7 percent wage-to-inflation gap, while retail earnings have outpaced price increases by 0.5 percent. Elise Gould, senior economist at the Economic Policy Institute and an expert in wage dynamics, told Newsweek that areas such as leisure and hospitality "experienced much faster wage growth coming out of the pandemic because of the sheer numbers of jobs lost and the need for employers to scramble to attract and retain workers." These effects, she said, were more pronounced for those at the lower end of wage distribution, who required more "enticement" from employers to return to less-compensated, face-to-face roles—bargaining power that was reinforced by the financial supports put in place by policymakers during the pandemic. Ahu Yildirmaz, President & Chief Executive Officer of the nonprofit Coleridge Initiative, which assists governments in using data for policymaking, said that the sectors where wages have kept up "not only faced intense competition for workers, but they also started from relatively lower wage levels." "That means percentage increases appear larger and more noticeable," he told Newsweek, adding that health care is a "bit of a special case," given funding support during the pandemic "helped reinforce wage gains, adding to the upward pressure." A trader works on the floor of the New York Stock Exchange, Monday, August 18, 2025. A welder carries steel at the site of a construction of a housing project, Thursday, July 31, 2025, in... A trader works on the floor of the New York Stock Exchange, Monday, August 18, 2025. A welder carries steel at the site of a construction of a housing project, Thursday, July 31, 2025, in Portland, Maine. More Richard Drew / Robert F. Bukaty/AP Photo In contrast, wages for those in manufacturing, professional and business services, financial activities and construction have slipped noticeably behind inflation. Education has fared the worst, with a 17.9 percent rise in pay trailing inflation by 4.8 percent. Educators have long suffered from the gap between income growth and inflation. According to the National Education Association's most recent annual report, average starting teacher salaries underwent their largest increase in 15 years in 2024. However, the labor union said that, when factoring in inflation, average teacher wages have "actually decreased by an estimated 5.1 percent over the past decade." "Education has lagged the most because even though teacher shortages persist, institutions face far more rigid pay structures," Yildirmaz told Newsweek. "School systems can't easily adjust prices or salaries in the way private employers can, so teacher pay scales tend to move slowly and remain constrained." Gould noted that the inability of wages to keep up has also been a function of the rapid inflation seen between 2020 and 2022, which reached an annualized rate of 9.1 percent in June 2022. This has been attributed to a mix of factors including pandemic-era supply chain shocks, post-lockdown demand surges, as well as the Russian invasion of Ukraine which drove up energy and food prices. What People Are Saying Martha Gimbel, executive director of the Yale Budget Lab, told Bankrate: "A wage increase is something you earn. Inflation is something that happens to you. It feels unfair to people that their hard-earned wage increase is getting eaten up by something that's not their fault." Ahu Yildirmaz, President & Chief Executive Officer of the Coleridge Initiative, told Newsweek: "Looking ahead, demographics and immigration will play a critical role in shaping labor supply. At the same time, the pace of AI adoption will influence demand. In service industries where human interaction is harder to automate wage pressure is likely to remain elevated. By contrast, in sectors more exposed to automation, wage growth may be more restrained." What Happens Next? Bankrate believes wage growth is on pace to match post-pandemic inflation by the third quarter of 2026, at which point its wage-to-inflation index will rise above zero. According to latest CPI report from the BLS, inflation accelerated 0.2 percent in July from June, and is up 2.7 percent on a 12-month basis. The core CPI, which excludes the volatile food and energy categories, increased by 0.3 percent for the month and is up 3.1 percent from a year ago. Most forecasts assume that inflation will remain broadly at this level for the remainder of 2025, the IMF forecasting annual inflation to hold steady at 3.0 percent on average this year. However, experts believe this will depend significantly on the extent to which the effects of President Donald Trump's tariffs are passed onto consumers.
Yahoo
30-04-2025
- Business
- Yahoo
The economy shrinks for the first time since 2022 — and stocks fall sharply
U.S. stock futures pointed sharply down on Wednesday as new data showed the economy contracted for the first time since 2022 and investors braced for a deluge of earnings. Nasdaq futures led the decline, down 1.8% shortly before the opening bell, while the S&P fell 1.3%. The Dow Jones Industrial Average sank 324 points, or 0.8%. Microsoft (MSFT) and Meta (META) report earnings after the bell, while two major economic reports — the advance estimate of first-quarter GDP and the Employment Cost Index — were released before the bell. Here's what to watch today. The U.S. economy shrank for the first time since 2022, as rising imports weighed on GDP and inflation ran hotter than expected. According to the Bureau of Economic Analysis's advance estimate, gross domestic product contracted at an annualized rate of 0.3% in the first quarter — steeper than the 0.2% decline economists had forecast. The drop marked a sharp reversal from the 2.4% growth rate logged in the final quarter of 2024. Prediction markets now point to strong belief that a recession is on the way — or already underway. Visa (V) posted a strong Q2, with non-GAAP EPS up 10% to $2.76 and revenue rising 9% to $9.6 billion. Payments volume grew 8%, cross-border volume rose 13%, and the company announced a $30 billion buyback. Still, the stock moved lower premarket — perhaps because the beat was already baked in. Visa shares are up 25% in the last 12 months. Starbucks (SBUX) shares tumbled 8% after reporting a rough quarter. U.S. comparable sales dropped 2% on a 4% decline in transactions, while international operating income fell 7%. Overall EPS sank 50%. Executives blamed restructuring costs and bad weather, but flat China sales and shrinking foot traffic point to a broader consumer slowdown. Shares sank 9% premarket. Yum Brands (YUM) delivered a solid quarter: EPS rose 13% as strength at Taco Bell and KFC offset weakness at Pizza Hut. CEO David Gibbs credited Yum's global reach, digital momentum, and a new AI partnership with Nvidia (NVDA). Mondelez (MDLZ) also posted strong results, with organic revenue up 4.2% and EPS nearly 9% higher. Emerging markets drove growth, while North America held steady. Cookies and chocolate, it turns out, remain a resilient indulgence even as pricier café visits lose steam. Booking Holdings (BKNG) beat expectations with 8% revenue growth and a 7% increase in gross bookings. Alternative accommodations outpaced traditional hotels, and the company saw a big jump in flight bookings. The results stand in contrast to recent airline warnings, hinting that travelers may be shifting how — but not whether — they spend. For the latest news, Facebook, Twitter and Instagram.
Zawya
30-04-2025
- Business
- Zawya
US labor costs rise moderately in first quarter
U.S. labor costs increased moderately in the first quarter as economic uncertainty caused by tariffs cools demand for labor. The Employment Cost Index (ECI), the broadest measure of labor costs, rose 0.9% in the first quarter after a similar increase in the October-December period, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the ECI would advance 0.9%. Labor costs increased 3.6% in the 12 months through March after rising 3.8% in the year through December. The ECI is viewed by policymakers as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes. Government data on Tuesday showed there were 1.02 job openings for every unemployed person, slightly down from 1.06 in February. President Donald Trump's sweeping tariffs have eroded business sentiment, which some economists worry could soon translate to job losses. Economists expect the Federal Reserve to resume cutting interest rates at some point this year. Wages and salaries, which account for the bulk of labor costs, climbed 0.8% last quarter after rising 1.0% in the fourth quarter. They advanced 3.5% on an annual basis, slowing from the fourth quarter's 3.8% gain. When adjusted for inflation, overall wages increased 1.1% in the 12 months through March after rising 0.9% in the fourth quarter. Private-sector wages and salaries rose 0.8%. They increased 3.4% in the 12 months through March after rising 3.7% in the fourth quarter. State and local government wages gained 0.8% last quarter, after increasing 1.1% in the October-December quarter. They gained 4.1% in the 12 months through March. Benefits for all workers increased 1.2%. That followed a 0.8% rise in the fourth quarter. They increased 3.8% in the 12 months through March after rising 3.6% in the October-December quarter. (Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama)
Reuters
30-04-2025
- Business
- Reuters
US labor costs rise moderately in first quarter
WASHINGTON, April 30 (Reuters) - U.S. labor costs increased moderately in the first quarter as economic uncertainty caused by tariffs cools demand for labor. The Employment Cost Index (ECI), the broadest measure of labor costs, rose 0.9% in the first quarter after a similar increase in the October-December period, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the ECI would advance 0.9%. Labor costs increased 3.6% in the 12 months through March after rising 3.8% in the year through December. The ECI is viewed by policymakers as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes. Government data on Tuesday showed there were 1.02 job openings for every unemployed person, slightly down from 1.06 in February. President Donald Trump's sweeping tariffs have eroded business sentiment, which some economists worry could soon translate to job losses. Economists expect the Federal Reserve to resume cutting interest rates at some point this year. Wages and salaries, which account for the bulk of labor costs, climbed 0.8% last quarter after rising 1.0% in the fourth quarter. They advanced 3.5% on an annual basis, slowing from the fourth quarter's 3.8% gain. When adjusted for inflation, overall wages increased 1.1% in the 12 months through March after rising 0.9% in the fourth quarter. Private-sector wages and salaries rose 0.8%. They increased 3.4% in the 12 months through March after rising 3.7% in the fourth quarter. State and local government wages gained 0.8% last quarter, after increasing 1.1% in the October-December quarter. They gained 4.1% in the 12 months through March. Benefits for all workers increased 1.2%. That followed a 0.8% rise in the fourth quarter. They increased 3.8% in the 12 months through March after rising 3.6% in the October-December quarter.
Yahoo
30-04-2025
- Business
- Yahoo
US labor costs rise moderately in first quarter
WASHINGTON (Reuters) -U.S. labor costs increased moderately in the first quarter as economic uncertainty caused by tariffs cools demand for labor. The Employment Cost Index (ECI), the broadest measure of labor costs, rose 0.9% in the first quarter after a similar increase in the October-December period, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the ECI would advance 0.9%. Labor costs increased 3.6% in the 12 months through March after rising 3.8% in the year through December. The ECI is viewed by policymakers as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes. Government data on Tuesday showed there were 1.02 job openings for every unemployed person, slightly down from 1.06 in February. President Donald Trump's sweeping tariffs have eroded business sentiment, which some economists worry could soon translate to job losses. Economists expect the Federal Reserve to resume cutting interest rates at some point this year. Wages and salaries, which account for the bulk of labor costs, climbed 0.8% last quarter after rising 1.0% in the fourth quarter. They advanced 3.5% on an annual basis, slowing from the fourth quarter's 3.8% gain. When adjusted for inflation, overall wages increased 1.1% in the 12 months through March after rising 0.9% in the fourth quarter. Private-sector wages and salaries rose 0.8%. They increased 3.4% in the 12 months through March after rising 3.7% in the fourth quarter. State and local government wages gained 0.8% last quarter, after increasing 1.1% in the October-December quarter. They gained 4.1% in the 12 months through March. Benefits for all workers increased 1.2%. That followed a 0.8% rise in the fourth quarter. They increased 3.8% in the 12 months through March after rising 3.6% in the October-December quarter. Sign in to access your portfolio
