Big raises may be coming back down to earth
The big raises that many Americans got over the past year are starting to get smaller.
Workers in the private sector saw average wages grow by 5.1% in the past year, to $31.58 an hour, according to the February jobs report issued Friday by the U.S. Department of Labor. Rank-and-file workers saw a higher bump, of 6.7%, to $26.94 an hour in February.
Employers have paid bigger paychecks to compete for workers in a competitive hiring market.
While February's annual wage growth is high by historical standards, there are signs that it's tempering. Hourly earnings for all workers rose by just 1 cent (or, by 0.03%) last month relative to January, a weak gain relative to prior months.
«What we're seeing is the sign that, in aggregate, wage growth is slowing down a little bit,» said Nick Bunker, economic research director for North America at the Indeed Hiring Lab.
For context, workers had gotten roughly 3.5% annual raises prepandemic, which at the time was considered robust, Bunker said.
«Even if wages don't continue to accelerate, but they're 4% or 5%, that's still quite strong,» he said. But it wouldn't be the same «gangbusters» growth from early 2021, he said.
Workers enjoyed greater bargaining power as the U.S. economy started emerging from its pandemic hibernation.
Employers' demand for workers rose at the same time that Covid-related factors (like health fears, child care duties, early retirements and a bigger cash buffer) were limiting their supply.
Job openings surged to record levels. Businesses raised pay to attract scarce talent. Workers started quitting their jobs at record levels, many enticed by higher pay elsewhere, part of a trend dubbed the «Great Resignation.»
More from Personal Finance:When buy now, pay later
Read more on cnbc.com
