Unions Drive Worker Compensation to Record Highs
Worker compensation costs in the US rose by 1.1% in the third quarter, exceeding economists' expectations and maintaining upward pressure on inflation. This marks the ninth consecutive quarter of 1% or more increase in labor costs, with compensation growth slowing to 4.1% in the past 12 months. Despite the slowdown, compensation remains well above pre-pandemic levels, giving workers leverage in a tight labor market. Major unions have capitalized on their newfound power, securing more generous contracts in industries such as Hollywood and automotive. The Federal Reserve aims to see compensation growth return to pre-pandemic levels to control inflation, but the pace may not be as fast as desired.