WASHINGTON - Americans are in line for their biggest wage increase in more than a decade, according to a report released Wednesday, as companies struggle against a tight labor market and high inflation.
Businesses are expected to bump up pay an average 3.9% in 2022, according to the Conference Board report. That's the fastest wage growth since 2008.
Higher pay for new hires was the most commonly cited reason for the uptick, according to the nonprofit business group, suggesting labor shortages and high turnover across industries could be giving employees more leverage. Inflation, which is higher than it has been in about 30 years, was the second most commonly cited factor.
The Conference Board's survey asks human resources executives about their compensation plans for the coming year. Their plans can change, but the surveys nonetheless hint at where wages might be going.
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The projections come as overall wage growth "dramatically accelerated" during the past six to eight months, the report says. Wage increases are most substantial among those younger than 25 and those who recently changed jobs. The increased willingness of many people to leave jobs for greener pastures may be persuading companies they need to pay more, the group said.
"Employers faced with extensive departures of experienced workers will raise wages faster for current employees in order to maintain an effective workforce," the report states.
Meanwhile, inflation has surged to the highest levels since 1982, according to the Conference Board, noting that the consumer price index jumped 7.8% from February to October.
The organization predicted that labor shortages are likely to continue throughout 2022, likely pushing wage growth well above 4%.