By Tim Cook
In a period of pronounced inflation not seen in 40 years, gains in earnings for individuals are often outpaced by rising consumer costs. While this is true for most workers, there is a segment of the American workforce that has seen actual growth of wages beyond the rate of inflation: the youngest workers.
Citing the Atlanta Federal Reserve Bank’s data, The Wall Street Journal reported that workers aged 16 to 24 saw a median hourly wage increase of 10.6% in January 2022 over the previous year, as opposed to an increase of 4% across the entire workforce.
While this growth can be partly explained by the fact that younger people tend to work lower-earning jobs and that a high increase in wages does not necessarily translate to a high wage, this bump is the highest seen in the last quarter-century.
Numerous industries such as retail (33%) and hospitality (46%) raised wages due to the pandemic’s impact on cost of living and labor shortages. With better pay being offered, many young people are more willing to take jobs they would not have before.
Improvements in the labor market are not restricted to those born after the late 1990s. Reuters reported on March 2 that hiring numbers in the U.S. exceeded the Bureau of Labor Statistics’ expectations. The Bureau said that over 400,000 workers had been hired on private payrolls since the start of this year.
The rise in new hires has been attributed to the Omicron variant of COVID-19 subsiding as a widespread infection, though it remains to be seen how the war in Ukraine and leaps in the price of oil will impact markets and inflation in the U.S.
Beyond potential trigger events for an economic downturn, worries about the accuracy of job forecasts persist. Revisions to data by the Bureau and private management services company ADP have cast doubt on the credibility of the recent jobs report. The 400,000 estimate is an aggregate of multiple forecasts, some ranging as high as Morgan Stanley’s 730,000 jobs and as low as Deutsche Bank’s 200,000.
CNN Business’ March 3 report noted this issue, explaining that the total U.S. labor market suffered a loss of about 22 million jobs during the COVID-19 pandemic. About 2.9 million positions remain unoccupied.
Now more than ever, people are willing to leave their jobs if a better opportunity presents itself, and it will take time to see if the Federal Reserve’s new interest rate hikes can strike a balance between growing wages, attracting workers, and curbing inflation.
