Job Market Is Fed’s Ally With Wage Growth Slowing Down, Indeed Says

 

US wage growth continues to slow as inflation comes down, offering encouraging news for the Federal Reserve as its chiefs meet at Jackson Hole, according to job-search website Indeed.

Wages posted in job ads on the site increased at an annual 4.7% rate last month, down from 5.8% in April and 8% in July 2022, according to Indeed’s latest Wage Tracker.

Slowdown in Wage Growth

Posted wages grew at a 4.7% annual rate in July, down from 8% last July

Source: Indeed Wage Tracker

“Anyone concerned about a ‘wage-price’ spiral should be relieved” by the latest pay data, said Indeed economist Nick Bunker. “The risk of a resilient labor market keeping wage growth, and therefore inflation, elevated is diminishing.”

Fed Chair Jerome Powell, who’s due to address the Jackson Hole meeting on Friday, and some of his colleagues have expressed concern that pay gains could keep inflation above target and require more interest-rate hikes. US consumer prices are currently rising at a pace of around 3%, according to headline measures. The Fed’s target is 2%.

The slowdown in Indeed’s wage measure aligns with a recent paper by Federal Reserve Bank of Cleveland researchers, which found that four-fifths of the increase in wage growth from the fourth quarter of 2020 through the first quarter of 2023 was due to inflation rather than any mismatch between the supply and demand of labor.

Another report by Gusto, a small business payroll provider, found that firms in July were offering new employees a wage that was 5.1% lower on average than hires for similar positions a year earlier. The study is based on data from some 300,000 companies that use the platform.

Indeed estimates that wages are likely to return to their pre-pandemic growth rate sometime between October and December if the current pace of deceleration continues.

For the Fed, that suggests that the job market is “an ally and not an adversary,” Bunker said.

An airline is giving staff a bonus worth more than $7,000 after posting a bumper profit

Qantas Airways has announced that it will be rewarding approximately 21,000 of its workers with a share of a bonus pot that is worth several hundred million dollars. This decision comes after the airline posted its first annual profit since 2019. Qantas, which owns Jetstar as well, achieved a pre-tax profit of about $1.6 billion, showcasing a remarkable recovery from the significant losses it experienced the previous year.

The impressive recovery that Qantas experienced can be attributed to several factors. Firstly, there has been a surge in demand for air travel, which has contributed to higher fares. Additionally, fuel prices have been more affordable, and the company has managed to reduce other costs. As a result of these positive developments, CEO Alan Joyce stated that flight delays and cancellations have largely returned to pre-COVID levels. He expressed his appreciation for Qantas staff and acknowledged their exceptional performance under challenging circumstances.

In 2021, Qantas rewarded approximately 21,000 employees by granting them shares in the company. These shares can now be cashed in and are valued at around $3,850. Furthermore, the employees will also receive a cash payment of approximately $3,200 as part of the finalization of new workplace agreements. Additionally, they will be provided with a travel credit worth about $320. When all these incentives are combined, the total value amounts to almost $7,400 per employee.

It is important to note that the finalization of the workplace agreements is closely related to Qantas' orders for 24 planes from Airbus and Boeing. These aircraft are scheduled to start being delivered in 2027.

Qantas is not the only company that has chosen to share its profits with employees. In May, Singapore Airlines awarded its staff a bonus equivalent to eight months' salary after achieving healthy profits.

Regarding the call for Qantas to repay pandemic-era government subsidies amounting to approximately $1.7 billion, CEO Alan Joyce has rejected this suggestion. He believes that the best approach is for the company to continue making higher profits and eventually begin paying corporation tax again. He anticipates that Qantas will resume paying corporation tax from 2025 onwards, indicating confidence in the airline's sustained financial recovery.