Increasing salaries for workers and rapid inflation

Increasing salaries for workers and rapid inflation

Aug 01, 2022

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The rate of wage increases by employers remained stronger than anticipated, but they were still insufficient to offset the inflation rate's even greater acceleration. According to the Employment Cost Index, which was issued by the Bureau of Labor Statistics, wages and pay for civilian workers grew 5.3 per cent over the year that ended in June and 1.4 per cent in the second quarter. Both metrics reflect a faster increase compared to the first quarter.

Although the quarterly change fell short of the 1.5% increase in the autumn of 2021, the 12-month gain was the largest since the spring of 1983. After accounting for inflation, the situation is less favourable. After accounting for increased costs, wages and salaries fell by 3.5% over the previous year. Just slightly less than the 3.6 per cent decline for the year ending in March, which was the worst decline since the agency started compiling figures that were adjusted for inflation in 2001.

According to Jason Furman, a professor of economics at Harvard University and a former head of the Obama administration's Council of Economic Advisers, the statistics clearly reveal that individuals are falling behind. Employers have had to boost pay to retain employees and fill unfilled positions as a result of the Covid-19 pandemic's extremely tight labour market, even though the rises don't keep pace with the cost of living.

Source - CNN 

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