Less Than Meets the Eye

Fat raises fail to keep the typical American worker afloat as consumer prices soar

- KERRI ANNE RENZULLI

DESPITE HISTORICALLY HIGH RAISES averaging 4.7 percent last year-a development that brought hourly wages to a record peak of $31.31—the typical American worker actually lost ground financially in 2021 due to soaring inflation. As prices for food, gas and other goods and services climbed at their fastest clip in nearly 40 years, those big pay hikes, in real terms, turned into the equivalent of a 2.4 percent pay cut for the typical private sector employee, according to the Bureau of Labor Statistics.

Only one industry, leisure and hospitality, gave wage bumps that beat last year's sharp rise in consumer prices, with an average 14 percent increase to $19.57 an hour in 2021. That's about double the 7 percent hike in the Consumer Price Index. It was the largest pay hike in a 12-month span of any industry on BLS records.

Average raises in the other 13 industries tracked by the BLS all failed to beat inflation. Coming closest: Professional and business services, which includes a diverse range of professions including accountants, lawyers, architects, graphic designers, management consultants, janitors, advertising agency workers, office administrators and call center workers. They collectively saw an average wage bump of 6.2 percent, to $37.81 an hour. Workers in the transportation and warehousing and retail trade industries also saw above-average gains in the 5 percent range.

The wage gains are still well above average historically, economists say. That's largely due to how tight the labor market has become as the pandemic drove more workers into retirement; forced parents, particularly mothers, to exit the workforce or scale back hours to care for young children at home; and other workers opted to forgo certain kinds of roles over COVID-related health concerns.