The pay premium for new hires has significantly decreased in recent months, with year-over-year pay growth falling to just 2.9% in September, compared to a 10% jump earlier in the year. Lower quit rates, increasing labor supply, and falling worker demand are contributing factors to the slowing wage growth. Industries such as finance and technology have been hit particularly hard, with pay growth at a standstill or even decreasing. Jobseekers are experiencing lower salaries and fewer negotiation opportunities compared to the "golden age for jobseekers" in 2021 and early 2022. Employers are hesitant to give pay raises to new hires to avoid exacerbating pay equity issues and to retain existing employees. Instead, they are offering low-cost benefits to attract talent.
Economist Paul Krugman has declared victory over inflation, claiming that the "war on inflation is over" and that we won at "very little cost." However, critics argue that Krugman's calculations are flawed as he measures inflation using a narrow definition that excludes food, energy, shelter, and used cars. The Consumer Price Index (CPI), which includes these factors, was 3.7% in September, higher than forecasts. Additionally, wage stagnation and the perception of a struggling economy among average Americans suggest that the battle against inflation is far from over for many.
Auto workers are preparing for a major strike over inadequate pay and job security, while the Big Three automakers (General Motors, Ford, and Stellantis) have authorized $5 billion in stock buybacks in the past year, benefiting shareholders instead of workers. The automakers have reported $21 billion in profits in the first half of 2023 but claim poverty when it comes to wage increases. The United Auto Workers (UAW) has proposed automatic payments to workers when buybacks or dividends are authorized, but the companies have responded with concessionary proposals. The rise in stock buybacks has been linked to the decline of organized labor, and experts argue that labor unions should focus on influencing resource allocation and corporate governance to address this issue.
