The cost of employing the average U.S. worker increased at the fastest pace on record in the third quarter, data from the Labor Department showed Friday.
But workers are still losing out to inflation on an annual basis.
The employment cost index jumped 1.3 percent from the prior quarter, according to Labor Department data released Friday. The gauge increased 3.7 percent from a year earlier.
Wages and salaries, which make up 70 percent of overall compensation, increased 4.2 percent for the 12-month period ending in September 2021, a big acceleration from the 12-month period ending a year ago. Compared with the second quarter, wages were up 1.3 percent. The cost of benefits rose 2.5 percent compared with 12 months ago, and 0.9 percent compared with the second quarter.
The Consumer Price Index, the Labor Department’s inflation metric, rose up 5.4 percent over the 12 months ending in September. Another measure of inflation, which gauges the changes in prices paid by wage earners and clerical workers, was up 5.9 percent.
The Department of Labor said wages and salaries fell 1.1 percent compared with a year ago after adjusting for inflation, which it does by comparing non-seasonally adjusted CPI for all urban consumers with unadjusted ECI.
A silver lining: inflation-adjusted wage costs rose six-tenths of a percentage point compared with the prior quarter, according to the Department of Labor. Overall compensation was up four-tenths of a percentage point. So even though workers are still behind on an annual basis, they regained some ground in the July through September period.
Economists had forecast a smaller rise in compensation costs of 0.9 percent for the quarter and 3.7 percent annually.
Compensation costs for workers in the private sector increased 4.1 percent over the year. Wages were up 4.6 percent and benefit costs up 2.6 percent.
Annual compensation cost increases ranged from 3.2 percent for management, professional, and related occupations to 6.1 percent for service occupations. Construction worker compensation rose three percent compared with a year ago. Leisure and hospitality compensation costs jumped 6.9 percent. Transportation and materials shipping workers were paid 5.7 percent more. The cost of employing workers in manufacturing rose 4.5 percent.