New estimates suggest that 2022 will feature a big boost in wages for the average American — the largest one-year pay bump since 2008, in fact. While many of us would welcome more pay, there is a catch that makes this good news a little grayer.
For the first time in some time, the worker has a little bit more negotiating power. With labor shortages reported across the country in several fields, businesses have had to add in extra perks—including higher pay, better benefits, or signing bonuses—to attract workers. Add that to the fact that workers are reconsidering their relationship to their labor and leaving their jobs for other, new ones, and what you’ve got is probably why we should expect a big wage boost in 2022.
According to the Conference Board’s Salary Increase Budget Survey, reports Business Insider, it’s estimated that budgets for raises in 2022 will jump by 3.9 percent next year. “Hourly wages alone have jumped 4.8 percent from November 2020 to November 2021, according to the Bureau of Labor Statistics’ latest data release,” Business Insider reports. “In the traditionally low-paying leisure and hospitality sector, wages have soared even higher, going up 12.3 percent year-over-year.”
All that sounds pretty good for workers. Why wouldn’t we want better wages and perks? But while wage boosts are coming in 2022, inflation, however temporary, is, too. According to The Washington Post, data released on Dec. 8 shows that “inflation is eating into many of those higher wages.” Adding, “Prices rose 6.2 percent in the past year, threatening to completely negate gains.”
Gad Levanon, an economist at The Conference Board, echoed to Business Insider that wage increases will likely lead to price increases, too. “A wage-price spiral — where higher prices and rising wages feed each other, leading to faster increases in both — may already be in the works,” he said.
So with all this, while it’s awesome that the average American worker is likely to see a major bump in 2022, the cost of everything else going up might eat into some of that joy — at least temporarily. In the meantime, the White House is weighing taking action against businesses that are raising prices — as they’ve recorded record profits in a trying year.