- Growth in employee wages and salaries in the third quarter of 2021 hits 20-year high
- Compensation up 1.3 percent from the previous quarter, including a 1.5 percent increase in pay
- Employers have been offering higher wages to compete for talent, with service workers and those in the leisure and hospitality sector seeing the strongest gains
Summary by Dirk Langeveld
Employee wages and salaries have been growing at the fastest pace on record in recent months, according to data from the Bureau of Labor Statistics.
The Employment Cost Index shows that overall compensation for civilian workers in the third quarter of 2021 was up 1.3 percent, including a 1.5 percent increase in wages and salaries from the previous quarter and a 0.9 percent increase in benefits costs. The data reflects the increasing leverage of employees as businesses encounter a scarcity in job applicants and increase their pay and benefits to compete for talent.
Annual increases for compensation included 4.1 percent for private industry workers, 3.7 percent for civilian workers, and 2.3 percent for state and local government workers. The annual increase in benefits costs ranged from 2.1 percent to 2.6 percent.
- Service workers were seeing stronger increases in compensation, with a 6.1 percent annual gain compared to 3.2 percent for management, professional, and related positions
- Compensation in the leisure and hospitality industry, which has been a leading job creator but also experiencing the highest quits rate among all sectors, is up 6.9 percent on an annual basis
- Compensation has remained fairly steady in construction jobs, rising just 3 percent from the previous year
- Salary increases have been keeping pace with inflation, which rose 1.2 percent in the third quarter of 2021
- With a substantial number of employees quitting to seek job opportunities elsewhere, a Federal Reserve study found that the typical worker who switched jobs saw their wages increase 5.4 percent