It’s the biggest drop since the Bureau of Labor Statistics began inflation-adjusted records in 2001. What’s more, it comes at a time when compensation costs — which include wages paid by employers as well as health, retirement and other benefits — are rising rapidly, before inflation. , where employers try to fill positions and retain their employees.
Inflation-adjusted cost of wages and salaries fell 3.6%, while benefits costs fell 4.2%, the two largest declines since the series began 21 years ago.
“For workers, that’s bad news,” Jason Furman, a Harvard economics professor and former chair of the Obama administration’s Council of Economic Advisers, said of the inflation-adjusted data. “Wages are dropping very quickly over the past year and are much lower than they were two years ago.”
Costs are rising quickly before inflation is factored in
Civilian workers’ compensation costs increased by a larger-than-expected 1.4% for the first quarter of 2022, before adjusting for inflation, according to the index. The cost of wages and salaries rose 1.2% and benefits costs jumped 1.8% from December.
Looking at the last year ending in March, the unadjusted compensation cost was up 4.5%, compared to 4.0% for the 12-month period ending in December.
The cost of wages and salaries increased 4.7% compared to 4.5% for the year ended December, and benefits costs increased 4.1% compared to 2.8%.
“What they worry about is that this high inflation has been going on for so long that if it starts to seep into the expectations of consumer companies, it will be more difficult to wrest inflation out of the system than just waiting for supply chains to correct,” she said.
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