Wage growth cools in October

You know what I used to see all the time like a year ago, on signs outside fast-food places, on billboards for big-box stores? “Signing Bonus” — offering several hundred dollars, at least, plus a starting salary well above minimum wage. I’m not seeing that so much anymore, and a recent report from the Bureau of Labor Statistics might have some insight as to why.

In around paragraph 22 in the October “Employment Situation Summary,” the BLS buried the lede: Wage growth in this economy continued to slow in October. But you can be sure the Federal Reserve economists parsing today’s report are paying close attention to that metric.

Average hourly earnings — the broadest measure of workers’ paychecks — rose 4.1% year-over-year in October. That’s down from 4.3% in September. Wages were accelerating by 4.8% per year back in October 2022. 

The monthly rate of wage growth was 0.2% in October — also a tad slower than in September.

As news goes, this is good for the Fed, not terrible, but also not great for workers.

“Wage growth has fallen sharply,” said Dean Baker, cofounder of the Center for Economic and Policy Research. “We saw the annualized rate over the last three months, it’s 3.2%, it’s a little higher if you take it over the last year — but it’s clearly come down a lot.”

Back in 2021, as employers scrambled to hire up, wage gains peaked around 6% per year for workers overall, and 14% for service workers like bartenders and waiters. 

Now?

“The current rate of wage growth is less than what we had in 2018-2019, when inflation was below the Fed’s target,” Baker said. “So I would think the Fed has to feel pretty good about this, that they’ve gotten wage growth down. You know, to my view it’s time for them to say ‘mission accomplished.'”

Wait for it. . . . No, don’t, you might be waiting a while. 

Meanwhile, employers are noting a downtrend in wage expectations, even among the highest-paid workers, said Ger Doyle at staffing firm ManpowerGroup. 

“The demands from candidates are a little bit more moderate,” he said. “I spend a lot of time on the technology side of the business, and we’ve even seen that there. They’re still extremely high, but definitely starting to come down.”

One group for whom the good times are no longer rolling is low-paid service workers. Their wages were rising by double-digits in 2021 and 2022, said Dean Baker.

“Doesn’t mean they were doing great, but they were doing better,” he said. “But that trend seems to have come to an end.”

Now, wage growth for leisure and hospitality workers, for instance, is pretty close to that of workers overall — with pay up in October to an average of $19 an hour.