The leisure and hospitality sector in New York saw a...

The leisure and hospitality sector in New York saw a 8.3% increase in weekly wages over the year ended in September.   Credit: Craig Ruttle

Americans' wages and salaries jumped in the three months ending in September by the most on record as companies are forced to offer higher pay to fill a near-record number of available jobs.

Pay increased 1.5% in the third quarter, according to the Labor Department, which has records on the data going back 20 years. That’s up sharply from 0.9% in the previous quarter. The value of benefits rose 0.9% in the July-September quarter, more than double the preceding three months.

The data released Friday further illustrates the rising leverage workers have gained in the job market this year, and they are commanding higher pay, more benefits, and other perks like flexible work hours. With more jobs available than there are unemployed people, government data shows, businesses have been forced to work harder to attract staff.

Uneven gains

New York has also seen a significant increase in weekly wages over the last year, growing by 3.4% in September year-over-year. That overall increase, however, doesn’t reflect the difference among different job sectors, said John A. Rizzo, chief economist for the Long Island Association business group,

"The nominal rise in wages varies a lot across industries," Rizzo said.

For example, since September 2020 to last month, the leisure and hospitality sector in New York saw a 8.3% increase in weekly wages, compared to the 0.9% increase seen by the trade, transportation and utilities sector during the same period, according to state Labor Department data.

While sectors like hospitality are in desperate need of workers, leading to increased wages, it’s important to note that leisure jobs, like waiters and housekeepers, have a much lower wage floor than other sectors, like financial activities which saw a smaller 3.4% increase.

Inflation's impact

Despite the upward pressure on wages, inflation across the country, which grew by 5.4% in September year-over-year, has outpaced wage growth over the last year in New York, Rizzo said.

"If inflation is running at about 5%, the nominal increase of 3.4% isn’t keeping up," he said. "Which is why people probably aren’t seeing it as boon because real wages are going down."

"The spending power of their wages hasn’t changed," he said.

Nationally, though, workers' gains are outpacing the rising cost of goods, if not narrowly.

Overall pay is keeping up with rising prices. The 1.5% increase in wages and salaries in the third quarter is ahead of the 1.2% increase in inflation during that period, economists said.

However, compared with a year ago, it's a closer call. In the year ending in September, U.S. wages and salaries soared 4.2%, also a record gain. But the government also reported Friday that prices increased 4.4% in September from year earlier. Excluding the volatile food and energy categories, inflation was 3.6% in the past year.

Trading up

Millions of Americans are responding to rising wages by quitting their jobs for better-paying positions. In August, nearly 3% of American workers quit their jobs, a record high. A higher number of quits also means companies have to raise pay to keep their employees.

Workers who switch jobs are seeing some of the sharpest income gains in decades. According to the Federal Reserve Bank of Atlanta, in September job-switchers saw their pay jump 5.4% compared with a year earlier. That’s up from just 3.4% in May and the biggest increase in nearly 20 years. For those who stayed in their jobs, pay rose 3.5%.

Lower-income workers at restaurants, bars and retail stores are seeing some of the largest income gains, but the wage increases are spreading. According to Oxford Economics, the proportion of jobs receiving a monthly pay rise of 0.5% for six months has jumped to 40%, from about 9% before the pandemic.

— With Victor Ocasio

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