Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Low-wage workers are getting 'eye-popping' pay raises, Goldman Sachs says

Low-wage workers are getting 'eye-popping' pay raises, Goldman Sachs says

Low-wage workers are making "eye-popping" gains in their paychecks, according to Goldman Sachs.

The bank told clients in a note Thursday that low-wage-worker pay rose 5.3% year-over-year in the second quarter. For the third quarter, the data isn't complete yet, but preliminary readings are on pace for a three-decade high of 6%.

Some industries posted even more significant increases in wages during the second quarter, including a 13% year-over-year spike for leisure and hospitality nonsupervisory workers. Since March, the industry's wages have risen 22%, mostly because emergency unemployment benefits included in the American
Rescue Plan took a larger effect on labor supply at lower wage levels. Skyrocketing wages can also be attributed in part to the rising demand for low-wage workers as the service sector has started recovering following a surge in vaccination, according to the report.

But Goldman Sachs warned that these wage indicators "cannot be taken at face value" because they are being distorted by the pandemic.

Inflation concerns


As the economy has recovered from the Covid crisis, employers have struggled to find workers amid an ongoing labor shortage. To attract employees, many employers have hiked pay.

Low-wage-workers' pay growth drives inflation for for low-skill consumer services, including hotel lodging, dining and dry cleaner services.

But if low-wage-worker pay continues to rise, it will probably contribute to boosting inflation even more, as companies hand customers the bill for their increased overhead. A key measure of inflation, the PCE price index, which tracks consumer spending, was up 4.3% over the 12 months ending in August, marking the fastest increase since January 1991.

Some consumer services have admitted to raised their prices in response to wage pressure. Chipotle (CMG), for example, raised its prices by about 3.5% to 4% in June after it raised employee hourly wages by about $2 to an average of $15.

Although rising wages are a good thing for low-wage workers who have struggled with stagnant compensation while corporate profits have soared, low-wage growth could signal that inflation isn't as transitory as the Fed might like.

But pay raises alone haven't been enough to bring some workers back on the job: Although job gains were looking promising over the summer, the United States only added 235,000 jobs in August, because of the Delta variant.

Continued wage growth could normalize given the end of unemployment benefits, or if there is a better-than-expected growth in the labor force. If wage growth continues to increase and exert upward pressure on inflation though, prices for consumers could continue to rise well into 2022.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×