Wage growth is cooling — but workers still have bargaining power, economists say

The gait of wage maturation seems to beryllium decelerating, according to the February jobs report issued Friday — but workers inactive person bargaining powerfulness successful a cooling but beardown job market, economists said.

"Workers person a precise beardown negotiating position," Mark Zandi, main economist of Moody's Analytics. "The labour marketplace is inactive precise beardown and workers are inactive successful the driver's seat."

Workers person enjoyed historically ample raises and wage increases since aboriginal 2021. Employers had to vie for workers successful a blistery marketplace characterized by record occupation openings and turnover.

While maturation is inactive supra average, the trendline points astatine a slowdown, economists said.

Employees saw their mean hourly net summation by 0.2% from January to February, the U.S. Bureau of Labor Statistics said Friday. That's down from a monthly complaint of 0.3% successful January and December, and 0.6% successful November.

It's besides the slowest monthly summation since February 2022, according to Jeffrey Roach, main economist astatine LPL Financial.

This isn't needfully a atrocious motion for workers, economists said.

The Federal Reserve has been raising involvement rates aggressively to effort cooling the system and rein successful high inflation. Reducing wage maturation is simply a cardinal purpose for the cardinal bank; those labour costs person been a contributing origin to historically precocious maturation successful the prices consumers wage for goods and services.  

Inflation has been outstripping wage maturation for the mean worker. The Fed is trying to reverse that dynamic, truthful workers bask wage gains aft accounting for inflation.

Overall occupation maturation successful February was stronger than expected and information successful the labour unit rebounded to its highest level since March 2020.

"Stronger rates of information could assistance companies capable unfastened positions and easiness wage maturation pressures going forward," said Julia Pollak, main economist astatine ZipRecruiter.

"Overall, then, the [February jobs] study suggests U.S. workers are enjoying the champion of some worlds — robust occupation maturation paired with easing inflationary pressures," she said.

Not each workers needfully person bargaining powerfulness successful the existent environment, though, said Aaron Terrazas, main economist astatine Glassdoor, a occupation site.

Workers successful "front line, skilled vocational work" are successful a presumption of strength, helium said. Those see sectors similar healthcare and leisure and hospitality, helium said. Those sectors saw "notable occupation gains" successful February, according to the Bureau of Labor Statistics.

But occupation seekers successful different sectors — peculiarly successful "skilled, cognition work," including exertion and existent property — person "dramatically less" powerfulness now, Terrazas said.

However, this isn't needfully a astonishment since these are among the astir interest-rate delicate areas of the U.S. economy, Zandi said. Slowing the U.S. system means immoderate portion of it volition endure a pullback, adjacent if the broader economical representation remains mostly healthy, helium said.

"We privation a satellite wherever unemployment is low, determination are tons of jobs, ostentation is nether power and your wages are rising faster than inflation," Zandi said. "All successful all, that's what appears to beryllium happening ... though possibly not accelerated arsenic radical privation to see."