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
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
Wave of Complaints Against Apple Over iPhone 17 Pro’s Scratch Sensitivity
Munich Airport Reopens After Second Drone Shutdown
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
×