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Analysis: Wage Growth Pushes Rising Costs to Record Highs

More than a year and a half after the COVID-19 pandemic first induced international economic upheaval, sluggish wage increases in American industries continue to alarm experts. President Joe Biden called for the assistance of the private sector in releasing bottleneck supply chain blockages in US ports that have appeared as a result of nation-wide uncertainty in the face of new viral strains of the coronavirus and rising inflation.

Wage growth spiked by 5.4% this year, according to the Federal Reserve Bank of Atlanta. Nominal wage growth targets usually range from 3.5–4%, making this year’s pay increase an anomaly even by non-pandemic standards. Should these rising wages match rising costs, the effects on the day-to-day lives of American workers would be minimal — however, wage increases remain substantially lower than contemporaneous cost of living increases.

According to the United States Department of Labor, food and shelter costs skyrocketed in September, contributing to more than half of the total increase in commodity and goods prices. As wages rise to lure individuals back into the workforce and many Americans receive economic stimulus packages, corresponding increases in the prices of basic necessities closely follows. Experts are concerned that these soaring costs will continue after the pandemic’s effect ebb. Because inflation is a self-fulfilling prophecy, it is possible that American consumers will be the cause of the very inflationary event that they fear, one that tears down reported consumer confidences and leaves the country without stable housing or food sources.

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