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Wage Inflation Finally Outpaces Consumer and Wholesale Inflation: What It Means for the Labor Market

Updated: Aug 1, 2023

According to the Bureau of Labor Statistics latest report, wage inflation now exceeds 5.7%, outpacing consumer inflation which came in at 4.0% year-over-year. This marks a positive shift for workers who experienced real wage declines during the post-pandemic inflation spike.


Andrew Crapuchettes, CEO of RedBalloon, noted that the US ongoing historic worker shortage is the key driver behind wage inflation. "We’re in an historic worker shortage as our economy continues to adjust to the decline in population growth,” said Crapuchettes. “That means competition for employees will continue driving wage inflation at its own pace, regardless of other factors. It’s the basics of supply and demand, and the tight labor market isn’t going to ease up anytime soon.”



With job openings outnumbering available workers nearly two to one, the ongoing wage inflation reflects the demand for skilled employees. This trend is expected to persist as the labor market remains tight and competition for talent continues to drive wage growth.

According to the U.S. Bureau of Labor Statistics, median weekly earnings for the nation's 121.5 million full-time wage and salary workers reached $1,100 in the second quarter of 2023 (not seasonally adjusted). This represents a 5.7 percent increase compared to the previous year, outpacing the 4.0 percent gain in the Consumer Price Index for All Urban Consumers (CPI-U) during the same period.


The recent surge in wage inflation surpassing consumer and wholesale inflation signals a positive trend for workers in the face of a historic worker shortage. The dynamics of supply and demand in the labor market are driving this shift, with competition for employees fueling wage growth. While workers experience a welcome increase in their earning potential, employers must adapt to the evolving labor landscape and strive to remain competitive in attracting and retaining top talent.

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4 Comments


Joe Cipale
Joe Cipale
Jul 18, 2023

Wow... shill for corporate America much?

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Tuberose
Tuberose
Jul 18, 2023

It is good news that wages have risen but they haven't risen enough to off-set the huge increase in housing prices! They have a long long way to go up before they come close to making up for the 3x increase in housing prices over the last decade.

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Tuberose
Tuberose
Jul 19, 2023
Replying to

Yes I have noticed house prices to start to fall a little lately, they need to fall a lot more with these higher mortgage rates making the housing mortgage payment unaffordable for most, considering salaries haven't risen enough. Hopefully this will change soon.

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