Current:Home > InvestUS wages rose at a solid pace this summer, posing challenge for Fed’s inflation fight-Angel Dreamer Wealth Society D1 Reviews & Insights
US wages rose at a solid pace this summer, posing challenge for Fed’s inflation fight
View Date:2024-12-24 21:41:17
WASHINGTON (AP) — Wages and benefits grew at a slightly faster pace in the July-September quarter than the previous three months, a benefit for workers but a trend that also represents a risk to the Federal Reserve’s fight against inflation.
Compensation as measured by the Employment Cost Index increased 1.1% in the third quarter, up from a 1% rise in the April-June quarter, the Labor Department said Tuesday. Compared with a year ago, compensation growth slowed to 4.3% from 4.5% in the second quarter.
Adjusted for inflation, total compensation rose 0.6% in the third quarter compared with a year earlier, much slower than the second-quarter increase of 1.6%.
By some measures, average pay cooled, economists pointed out. Wages and salaries for private sector workers, excluding those who receive bonuses and other incentive pay, rose 0.9% in the third quarter, down from 1.1% in the previous period.
Fed officials consider the ECI one of the most important measures of wages and benefits because it measures how pay changes for the same mix of jobs, rather than average hourly pay, which can be pushed higher by widespread layoffs among lower-income workers, for example.
Growth in pay and benefits, as measured by the ECI, peaked at 5.1% last fall. Yet at that time, inflation was rising much more quickly, reducing Americans’ overall buying power. The Fed’s goal is to slow inflation so that even smaller pay increases can result in inflation-adjusted income gains.
Fed Chair Jerome Powell has indicated that pay increases at a pace of about 3.5% annually are consistent with the central bank’s 2% inflation target.
While higher pay is good for workers, it can also fuel inflation if companies choose to pass on the higher labor costs in the form of higher prices. Companies can also accept lower profit margins or boost the efficiency of their workforce, which allows them to pay more without lifting prices.
veryGood! (38345)
Related
- How to Build Your Target Fall Capsule Wardrobe: Budget-Friendly Must-Haves for Effortless Style
- Los Angeles is using AI to predict who might become homeless and help before they do
- 2030 World Cup set to be hosted by Spain-Portugal-Morocco with 3 South American countries added
- US appeals court to hear arguments over 2010 hush-money settlement of Ronaldo rape case in Vegas
- Historian Doris Kearns Goodwin to kick off fundraising effort for Ohio women’s suffrage monument
- Rep. Patrick McHenry of North Carolina is the leader of the House, at least for now
- First Nations premier to lead a Canadian province after historic election win in Manitoba
- Any job can be a climate solutions job: Ask this teacher, electrician or beauty CEO
- Guns smuggled from the US are blamed for a surge in killings on more Caribbean islands
- MacArthur 'genius' makes magical art that conjures up her Afro-Cuban roots
Ranking
- Northern Taurid meteor shower hits peak activity this week: When and where to watch
- 'Like living under a slumlord': How mega investor made affordable homes a rental nightmare
- BET Hip-Hop Awards 2023: DJ Spinderella, DaBaby, Fat Joe, Coi Leray, more walk red carpet
- Kevin McCarthy removed as House speaker in historic vote
- Taylor Swift Politely Corrects Security’s Etiquette at Travis Kelce’s Chiefs Game
- Sofia Coppola's 'Priscilla' movie dissects Elvis Presley wedding, courtship: Watch trailer
- Applebee's Dollaritas return: $1 margarita drinks back for limited time after 3-year hiatus
- Shares in Scandinavian Airlines plunge to become almost worthless after rescue deal announced
Recommendation
-
'Wanted' posters plastered around University of Rochester target Jewish faculty members
-
Greece wants European Union to sanction countries that refuse deported migrants, minister says
-
How to enter $1 million competition for recording extraterrestrial activity on a Ring device
-
'A real tight-knit group:' Military unit mourns after 2 soldiers killed in Alaska vehicle crash
-
Get well, Pop. The Spurs are in great hands until your return
-
Officers in suburban Atlanta killed a man who tried to steal a police cruiser, investigators say
-
Serbian authorities have detained the alleged organizer behind a recent shootout with Kosovo police
-
Charity Lawson Reacts After DWTS Partner Artem Chigvintsev Tests Positive for COVID