OCTOBER’S EMPLOYMENT report was impressive: 531,000 jobs were created, beating economists’ expectations. The unemployment rate ticked down to 4.6%, while average hourly earnings increased a solid 0.4% from September.
Across the board, the data from the U.S. labor market show the economy is humming along, with no signs of stagflation. I like to dig into the wage numbers to see which segments of the workforce are enjoying the best pay increases. Leisure and hospitality pay rose the most, jumping 11.2% from a year ago. In aggregate, total private sector annual wage growth was 4.9%.
That sounds great—until inflation is considered. We’ll get a look at October’s Consumer Price Index (CPI) report Wednesday morning. The consensus estimate calls for 5.8% headline inflation, while core CPI—which excludes the volatile food and energy categories—is expected to climb 4.3%. On an inflation-adjusted basis, wages are up compared to core CPI, but down relative to headline CPI.
Annual employee reviews often take place in the final few weeks of December. Yearly pay raises are usually communicated before the holidays, too. If your salary doesn’t keep pace with inflation, you’re effectively getting a pay cut.
While it can be an uncomfortable conversation, employees must stick up for themselves, particularly in 2021, with inflation running at the highest pace in decades. Requesting an adequate raise to cover the increased cost of living shouldn’t be a controversial request.
Employers must be careful, too. The latest Job Openings and Labor Turnover Survey (JOLTS) report from the Labor Department revealed a record number of workers quitting. Today’s job market features the biggest pay jump for those workers who switch jobs rather than for those who stay put. This year, maybe more than ever, it can pay to simply ask for an extra pay bump—and for employers to give it.