One element of inflation that is particularly worrisome to economists is wage inflation.
When wages rise, businesses feel freer to raise their own prices. Then workers demand still higher wages to afford the higher prices. And then businesses are tempted to raise their prices further. So consumers end up with an inflationary spiral.
Average hourly earnings soared 5.6% in the 12 months through March. Workers switching jobs are particularly benefiting.
Nearly two-thirds (about 64%) of people who recently switched jobs said their new positions pay more than their old ones, according to a survey from ZipRecruiter given exclusively to The Wall Street Journal,
Almost half these job switchers garnered pay increases of 11% or more and almost 9% received a raise of at least 50%.
Wall Street Newbies and Walmart Truckers
Wage increases have bloomed across many different kinds of jobs. Walmart WMT announced in April that it’s raising starting pay for its truck drivers to a range of $95,000 to $110,000, up from the previous average of $87,500.
Rookies on Wall Street aren’t faring so badly either.
Scroll to Continue
Top global investment banks raised wages for interns by more than a third (37.2%) for the current internship season compared with a year earlier, according to finance career site Wall Street Oasis, as cited by Bloomberg.
Proprietary trading firm Jane Street is doling out $16,356 a month to interns. That translates to more than $196,000 a year.
Wall Street Oasis Founder Patrick Curtis told Bloomberg that wage gains over the past year for beginning bankers at big time institutions are the largest he has witnessed since he started his company in 2006.
Tough Times for Many
Not everyone is making out like a bandit. Those at the bottom of the wage scale need a big increase in wages to make a decent living.
Even if wage hikes continue at the torrid 8.1% pace of 2019-21, it would take 10 years for a worker in the 20th percentile of wages to reach $20 an hour, according to calculations by Lawrence Mishel, a distinguished fellow at the Economic Policy Institute, cited by Fast Company.
If you’re in the 20th percentile, 20% of American workers are earning less than you and 80% are earning more. Someone in the 20th percentile earns $14.09 an hour.
The $20 an hour figure is significant, Fast Company points out, because that’s what a worker in an average-size family would need to have “a decent standard of living,” according to Living Wage for US, a wage advocacy group.