Wage growth is struggling to keep up with inflation
With the exception of a couple of sectors, wage growth in the U.S. is struggling to keep pace with inflation—meaning workers in the majority of industries are relatively worse off.
The New York Fed’s latest wage inflation report found that most, but not all, industries have seen a synchronized decline in wage growth since October 2022, with the notable exceptions of two sectors: public administration and mining and construction.
The mining and construction sector has been more consistent and persistently stronger than the rest of the economy, adds the regional Fed bank, which could be related to the construction of AI data centers, with sustained demand fueling wage growth.
The paper, written by three New York Fed economists (
Martín Almuzara,
Richard Audoly, and
Davide Melcangi) concludes that, looking ahead, “considerable uncertainty remains.” They explain: “On the one hand, specific industries such as construction may continue to put some upward pressure on wage inflation, as they have done in recent months.”
“On the other hand, any deterioration of labor market conditions could result in renewed downward pressure on wage inflation.”