Americans are getting paid more anywhere and everywhere.
The Federal Reserve’s latest Beige Book report — a collection of economic anecdotes — released on Wednesday showed that wherever Fed officials were talking to business owners, people were talking about wages going up.
For the broadest overview, the report said:
Wage pressures were generally stable to increasing. Most Districts said that wage pressures increased only for skilled occupations and for workers that were in short supply, although a few Districts saw broader pressure. Cleveland said that wage pressures were widespread, especially for higher-skilled jobs, while Atlanta reported signs of emerging pressure to raise starting wages, even among low-skilled jobs. The Atlanta and San Francisco Districts said some companies were revising incentives and benefit programs to retain and attract talent. Chicago, on the other hand, reported some firms cutting benefit packages to contain labour costs. A few Districts mentioned issues related to the minimum wage. For example, contacts in the Boston District cited increased labour costs for restaurants due to changes in minimum wages, and the Chicago District said recent initiatives were putting upward wage pressures on low paying jobs. Finally, the Dallas District reported that some hospitality contacts increased starting pay as a preemptive measure for future minimum wage increases.
But on a district-by-district level — there are 12 Fed districts — wage pressures seemed strongest in the Cleveland and San Francisco districts.
In Cleveland, wage-related comments included:
- “Difficulty finding high-skilled craft and professional workers is driving up wages in some job categories.”
- “An auto executive reported that he expects a general lifting of wages across the motor vehicle industry because of the recent UAW contract negotiations.”
- “The construction industry remains challenged by a labour shortage, including laborers and skilled craftsmen. The end result is upward pressure on wages.”
- “The retail sector is confronting stiffer labour competition. Higher turnover of managerial staff and hourly workers combined with a smaller pool of qualified workers is driving up wages.”
- “Payrolls were stable over the period, but the market for [auto] service technicians is very tight, putting upward pressure on wages.”
- “Hiring has slowed during the past few months because of the slowdown in demand and is now primarily for replacement. That said, a [truck] driver shortage still exerts upward pressure on wages.”
In San Francisco, wage-related comments included:
- “Upward wage pressures increased across the District.”
- “On balance, wage growth for high-skilled workers exceeded that of low-skilled workers; however, contacts in a few areas reported that labour shortages for entry-level employees increased relative to the previous survey period.”
- “Wage pressures grew in the health-care sector, particularly for specialised positions such as nurses and software developers.”
- “Labour shortages in the financial sector have increased pressure on firms to raise compensation levels, but some contacts reported reliance on favourable benefit packages rather than salary increases to retain and attract talent.”
- “In the technology sector, higher demand for labour bumped up wages for both experienced and entry-level workers.”
- “Wage increases in the grocery industry were modest; one contact noted that available labour supply is largely in line with demand, and stiff competition among retailers limits their ability to pass wage increases on to prices.”
In October, the jobs report showed that average hourly wages rose 2.5% over the prior year, the most since the financial crisis. And on Friday, the November jobs report is expected to show wage growth continued but was tempered some, rising 2.3% over the prior year.
Wage growth has been closely watched as economists and strategists look to determine how much “slack” remains in the labour market, with the idea being that the more excess labour there is still looking for work, the more employers retain pricing power over their employees.
Additionally, inflation has been lagging below the Fed’s 2% target, with some arguing that no inflation is going to show up until workers (who are ultimately consumers which drive the US economy) have more money in their pockets.
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