Having higher salaries sounds good for any worker; however, in the United States, the phenomenon of having high wages is fueling the worst inflation in recent times 40 years.
The phenomenon in which higher income for workers fuels inflationary pressures, was not seen in the country since the decade of 1970, according to a report published by Fox Business.
What happens is a combined inflationary factor, in which high inflation leads wages to increase , and consequently spending and higher prices are fueled.
But this also has to do with the extraordinary characteristics of the labor market, in the that wages have become the currency of exchange for workers.
The foregoing would be a reflection of why the country adds seven consecutive months with more than 10 million jobs available.
Last February alone, the labor market had 11.3 million, compared to 7.7 million in February 2020, just before the coronavirus pandemic.
In the middle of that scenario, at least 4.4 million Americans, 2.9% of the workforce, he quit his job in February, according to data from the Department of Labor.
The combination of a vacancy offer that exceeds by much to the number of workers seeking employment results in increases in salary offers.
According to the salary tracker of the Federal Reserve Bank of Atlanta, in March, annual salary growth for the average worker reached 6% in March, which means 3.4% more compared to March 2020.
Experts consider that this phenomenon of high wages and high inflation can lead to a “ spiral of prices and wages”, in which the more you earn, the more the goods and services cost.
The Fed views the vibrant labor market with caution
One of the most active voices during the recent inflationary stage is that of the president of the Federal Reserve, Jerome Powell, who views the state of the labor market with concern.
“It is too ‘hot’. This ‘heat’ is unsustainable”, Powell pointed out at a meeting between the International Monetary Fund and the World Bank, last week, regarding the status of the labor market in the United States.
Meanwhile, American workers continue to be encouraged to quit their jobs and look for new jobs with better salaries.
At least the 47.100% of workers who signed with a new company in the last few months received a salary increase of 13% or more, according to a survey conducted by ZipRecruiter.
Not only that, the 22% additionally received a signing bonus with his new company; a practice that was almost non-existent before the pandemic.
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