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The government’s latest inflation read, the Core Personal Consumption Expenditures Price Index, showed on Friday morning that prices may start to fall from record highs, but financial stress among workers amid the he highest inflation in four decades remains higher than ever.
Two-thirds of American workers say their wages are not keeping pace with inflation, and the percentage of employees planning to leave a job is at its highest level in four years, according to a new CNBC survey | Momentive Workforce Survey.
Sixty-six percent of workers say inflation has outpaced the wage gains they’ve made in the past 12 months, while 19% say increases in their wages have roughly matched inflation and 13 % say their salary has increased more than inflation.
As more American workers at multiple income levels express frustration that economic data has signaled throughout this year — that price gains continue to outpace wage gains — the pressure is particularly high among workers. middle income. According to the survey, those with incomes between $50,000 and $150,000 are more likely than both high-income and low-income groups to say their wages have not kept up with inflation.
The online survey was conducted May 10-16, 2022 among a national sample of 9,254 workers in the United States.
While 72% of workers in the CNBC|Momentive poll say they are “well-paid” or “very well-paid,” that’s tied for the lowest level in the survey’s history, while the 28% who say they don’t get paid well are at an all-time high.
Thirty-nine percent of workers say they have seriously considered quitting their job in the past three months, the highest level since the survey began in 2019, and up 6% from last November.
The percentage of workers considering quitting their jobs is peaking according to surveys.
CNBC|Momentive Workforce Survey
“Inflation is absolutely a driver of worker turnover right now,” said Laura Wronski, senior scientific research manager at Momentive. “Workers who say their pay outpaced inflation are the least likely to say they’ve considered quitting their job in the past three months, and workers who say inflation outpaced their pay increases are the most likely to look for a new job.”
The latest inflation reading has boosted hopes that peak inflation may have been passed, but an easing in prices does not mean high inflation is disappearing.
Real wage growth across the wage distribution is down, and it’s middle-income workers who are worse off than they were before the pandemic – the lowest-paid workers, in contrast, while fighting inflation saw the largest wage gains. “They’re being hit very hard by this,” said Heidi Shierholz, president of the Economic Policy Institute, which focuses on the needs of low- and middle-income Americans.
As companies such as Microsoft and Apple announce wage increases for workers this month, both among the working class and, in Apple’s case, workers at its retail stores where early campaigns of unionization are underway, Shierholz said workers are aware of an important data point that frustrates and urges them to demand more: corporate profits are rising.
“We know a lot of the price increase is because employers’ profits have gone up dramatically,” she said. “Workers pay the highest prices and their employers reap the profits, and that’s just a fundamental imbalance. There is the ability to go higher. There is a choice. These gains go to profits and employers could make a different choice. she says.
Quit rates are high across the wage distribution, but the record level of workers considering quitting does not directly overlap with the squeeze of middle-wage workers, as the highest level of quits is among the lowest paying jobs where the highest level of openings exist.
“Lower-wage workers are able to change jobs and find new opportunities at higher salary levels. Very high-wage workers, those earning $150,000 or more per year, are more likely to doing jobs that increased salaries the most, so even though they stayed in their role, they saw their salaries go up,” Wronski said.
Quit rates in the Covid economy show the biggest increases in low-wage sectors, including retail and foodservice, not the more concentrated knowledge worker jobs in the middle-income bracket.
“People expected a lot more workers to jump ship when the big increases didn’t come, and they didn’t,” said Rucha Vankudre, senior economist at the market research firm Emsi Burning Glass work.
It’s time to get your wage gains
Now may be the time to demand more from employers, as the level of wage gains and job opportunities in the current market is not sustainable. Quit rates will decline and the intense competition for workers in the labor economy will ease as overall employment continues to grow.
“As we get closer and closer to full employment, job growth will slow and job openings will slow,” Shierholz said.
And as Covid moves further into the rearview mirror, more workers will return.
“It’s not good for workers,” she said. “We are in this extraordinary moment of increased bargaining power for workers due to some extraordinary circumstances of the Covid recovery. These will not last.”
An economy that is creating more than 500,000 jobs a month and as many in the first four months of this year as in most full years of the past decade cannot continue at this rate, which means the ability to shift jobs and receive higher salary increases. due to strong competition for workers will decline.
There will be a lasting realization among workers that they can unite and demand more from employers, whether it’s wages, benefits or company values. “That realization won’t go away,” Shierholz said.
Recent wage increases from Microsoft and Apple are an acknowledgment of increased worker power at companies with the highest profit levels in the market. But one inflationary truth that will remain is that a $22 hourly wage for a worker at an Apple store is a lot less three years from now. “Those wage gains won’t be cut, but we’re still going to have inflation. That’s a constant thing. It’s not like now that we got those wage increases, it’s mission accomplished. He remains still a lot to do,” said Shierholz.
With two job offers for each worker, power remains tilted towards the worker, and economists say it is difficult to envision a situation in which employers reclaim all the power that has shifted in recent years.
“We just don’t have the people to fill these jobs and employers will have to give a little bit. We’ve never been here before, we’ve never had so many job openings,” Vankudre said.
Employers have already become more flexible on terms like hybrid working, and in terms of the benefits and training offered, but wages are not keeping pace with inflation in real terms.
“We expected everyone [employers] would make market adjustments and that hasn’t really happened,” Vankudre said.
Meanwhile, time is running out for a record job recovery.
“Now is the time to get your paychecks if you can,” Shierholz said.