Workers are beginning to get pinched as nominal and real wages decline
By Andy Kriege, YSN
According to several recent articles on wage rates, pay for new hires is beginning to wane after years of sizable salary increases. This is giving workers looking to job hop pause to reconsider what gains they can expect by taking a new post.
Nominal wages (the actual amount you get paid) have been steadily increasing over the past few years as businesses aggressively competed to fill pandemic-induced worker shortages. Now, the tables are beginning to turn as the job market cools down and businesses are hiring fewer employees and paying new hires less than they did just months ago.
And in many cases they are paying much less. According to a report in The Wall Street Journal, average pay for most positions has declined from last year, based on postings for more than 20,000 job titles on ZipRecruiter. Some of the steepest wage declines have been in technology, transportation and other sectors that experienced a hiring frenzy in 2021 and early 2022.
The newspaper cited Denver-based Appliance Factory & Mattress Kingdom. Chief executive Chuck Ewing said he recently adjusted the hourly pay for administrative workers down to $18 from $20 a year ago. “There are more people looking for work now,” he explained. “It’s just not as competitive.”
The declines mark a stark turnaround from 2022, when compensation for three-quarters of advertised job titles rose from the prior year, according to ZipRecruiter stats. In a July survey of about 2,000 employers conducted by the online hiring platform, nearly half said they had reduced the pay for recent job openings.
Indeed.com is reporting similar results. According to Bloomberg News, wage growth in U.S. job postings has been softening for more than a year now, and at the current rate it could return to pre-pandemic levels by early 2024. The slowdown has been broad-based and is touching all industries, although it’s been particularly pronounced in low-wage sectors like retail. These are the same positions that saw the biggest gains as the economy recovered from the pandemic.
At its current rate of deceleration, wage growth would return to its 2019 average of 3.1% late this year or early in 2024, Indeed.com said.
Bloomberg also noted that nominal weekly wages began falling in late 2022 and are continuing to decline in the second half of this year. At the same time, real wages (wages adjusted for inflation) have been falling relative to the cost of living for well over two years. The combined effect of shrinking nominal wages coupled with the decline of real wages is pinching workers at both ends, and may be the harbinger of a much anticipated decline in consumer spending.