US wages rose at a solid pace this summer, posing challenge for Fed’s inflation fight

Oct 31, 2023, 5:49 AM

WASHINGTON (AP) — Wages and benefits grew at a slightly faster pace in the July-September quarter than the previous three months, a benefit for workers but a trend that also represents a risk to the Federal Reserve’s fight against inflation.

Compensation as measured by the Employment Cost Index increased 1.1% in the third quarter, down from a 1% rise in the April-June quarter, the Labor Department said Tuesday. Compared with a year ago, compensation growth slowed to 4.3% from 4.5% in the second quarter. Still, that is faster than the rate of inflation, suggesting Americans saw an increase in their purchasing power after pay trailed inflation for much of 2021 and 2022.

Fed officials consider the ECI one of the most important measures of wages and benefits because it measures how pay changes for the same mix of jobs, rather than average hourly pay, which can be pushed higher by widespread layoffs among lower-income workers, for example.

Growth in pay and benefits, as measured by the ECI, peaked at 5.1% last fall.

While higher pay is good for workers, it can also fuel inflation if companies choose to pass on the higher labor costs in the form of higher prices. Companies can also accept lower profit margins or boost the efficiency of their workforce, which allows them to pay more without lifting prices.

Fed Chair Jerome Powell has indicated that pay increases at a pace of about 3.5% annually are consistent with the central bank’s 2% inflation target.

United States News

Palestinians displaced by the Israeli air and ground offensive on the Gaza Strip walk through a mak...

Associated Press

Rifts seem to appear between Israel’s political and military leadership over conduct of the Gaza war

In a rare public rift between the country’s leadership, an Israeli army spokesman appeared to question the goal of destroying Hamas.

4 hours ago

Associated Press

Probe finds carelessness caused Jewish student group’s omission from New Jersey high school yearbook

An investigation into how and why a Jewish student group was erased from a New Jersey high school yearbook found the omission was caused by negligence and carelessness, but was not done on purpose or out of malice, the school district announced Wednesday. East Brunswick Public Schools hired a law firm to investigate after the […]

5 hours ago

California Gov. Gavin Newsom announced Tuesday, June 18, 2024, that he wants to restrict students' ...

Associated Press

California governor wants to restrict smartphone usage in schools

Gavin Newsom announced he wants to restrict students' usage of phones during the school day, citing the mental health risks of social media.

5 hours ago

Associated Press

Shooting in Philadelphia wounds 7 people, police say

PHILADELPHIA (AP) — Seven people were wounded Wednesday evening in a shooting in Philadelphia, police said. The shooting happened just before 6:30 p.m. in North Philadelphia. The victims include a 19-year-old man who was shot in the leg, a 31-year-old woman shot in the hand, a 23-year-old man shot in the buttock, and two women […]

6 hours ago

Associated Press

Boaters find $1 million of cocaine floating off Florida Keys

MIAMI (AP) — Recreational boaters found $1 million worth of cocaine floating in the ocean off the Florida Keys. Samuel Briggs II, the acting chief patrol agent of the U.S. Border Patrol, wrote about the find in a social media post on X. Briggs posted video Monday night showing the wrapped packages of cocaine being […]

9 hours ago

Associated Press

Police credit New Yorkers for suspect’s arrest in the rape of a 13-year-old girl

NEW YORK (AP) — Residents of a New York City neighborhood were praised for their role in the arrest of an Ecuadorian accused of raping a 13-year-old girl, a crime that the city’s police commissioner said “shocked our entire city.” Christian Geovanny Inga-Landi, 25, was arrested early Tuesday outside a deli in Corona, Queens. He […]

10 hours ago

Sponsored Articles


Sanderson Ford

3 new rides for 3 new road trips in Arizona

It's time for the Sanderson Ford Memorial Day sale with the Mighty Fine 69 Anniversary, as Sanderson Ford turned 69 years old in May.


DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.


Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

US wages rose at a solid pace this summer, posing challenge for Fed’s inflation fight