Key facts
- Inflation in May reached 4.2%, surpassing private-sector wage growth of 3.4%.
- The information sector, utilities, and construction are experiencing wage growth exceeding inflation.
- Employment in the information sector has declined despite higher average hourly earnings.
- Healthcare and private education saw the lowest wage growth but the highest job gains.
- Labor shortages are cited as a reason for rising wages in utilities and construction.
Inflation in May rose to 4.2%, exceeding private-sector wage growth of 3.4% for the second consecutive month, according to new data. However, three sectors are still seeing wages grow faster than the rate of inflation: information, utilities, and construction.
The information sector's wage growth was more than a percentage point above inflation. However, employment in this sector has decreased by 11% from its peak in late 2022 and by 1% since January. Economists suggest that workforce reductions might be disproportionately affecting lower-wage workers, thereby increasing the average hourly earnings of the remaining employees.
In contrast, private education and health services experienced the lowest wage growth but recorded the highest net job growth last month, with healthcare contributing the majority of the 610,000 new jobs. Daniel Zhao, chief economist at Glassdoor, noted that stagnant wage growth alongside job expansion makes it difficult for workers to keep pace with inflation.
Utilities and construction are the other sectors where wage growth is outpacing inflation. Experts attribute this to employers facing labor supply shortages, leading them to increase wages to attract new candidates. Kory Kantenga, LinkedIn's head of economics for the Americas, cautioned that even in sectors with wage growth exceeding inflation, not all workers benefit equally, as annual raises are not universal, and some may not keep up with rising costs.