The job market remains tight, but data and surveys show wage growth will keep slowing
At the worst of the pandemic labour crunch, convenience store chain Sprint Mart struggled to staff its shops across the southern US as available workers drifted to the higher wages Amazon.com offered at its fulfilment centres or opted for flexible gig economy jobs.
In the Federal Reserve’s quest to tame inflation and find a stopping point for interest rate increases, few dynamics will be as important as what played out in Sprint Mart’s drive to coax workers back to the sort of front-line service jobs hit hardest by the pandemic. Fed officials, chief among them chair Jerome Powell, have singled out hiring and wage trends in the broad service sector as central to their outlook for inflation and, therefore, monetary policy.
Businesses “are looking to have more workers than fewer. That is a general proposition,” Atlanta Fed President Raphael Bostic told reporters last week. Yet they also “expect to ratchet down the pace of wage increases and eventually expect it to normalise ... We are hearing a great consensus that this is still in catch-up mode and that it will attenuate.”
Upcoming data will tell the tale more fully, including the latest federal survey on job openings and layoffs released on Wednesday, followed on Friday by an employment report for February that will include an update on wage growth. Fed officials at their January 31-February 1 meeting appeared to agree there were “tentative signs” hiring was getting easier and growth in employment costs was slowing, meeting minutes showed.
There also have been high-profile layoffs. But while rounds of firing at companies such as Alphabet’s Google and Facebook-parent Meta Platforms have roiled the tech industry, other firms are picking up the slack.
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