A new Conference Board survey predicts a 3.9% wage increase for American workers next year, up from 3% in the business research group’s April survey.
That may sound great on the surface, but with inflation raging, it might not be enough to boost consumers’ buying power. Consumer prices soared 6.2% in the 12 months through October.
At that level of inflation, the 3.9% wage gain turns into a 2.3% decrease in real buying power.
To be sure, there’s a good chance inflation will moderate from that level.
Bank of America forecasts the consumer price index will rise 4.6% in 2022, matching this year’s projected increase. That would still imply a 0.7% decrease in real buying power next year.
In any case, the 3.9% wage increase would mark the highest rate measured by the Conference Board in its Salary Increase Budget Survey since 2008.
“The swell in compensation expectations for next year reflects rising wages for new hires and inflation,” Grad Levanon, a Conference Board economist, said in a statement.
As for wage increases this year, “average 2021 actual total salary increase budgets jumped from 2.6% in the April 2021 survey to 3% in the November 2021 survey,” he said.
“Growth in wages for new hires and accelerating inflation are the main causes of the jump in salary increase budgets.
“The November Salary Increase Budget Survey shows that almost half of respondents (46%) said that the increase in wages of new hires played a factor in salary increase budget estimates for 2022, and 39% said that increased inflation played a factor.”