Company employees are getting pay raises just for staying on the job rather than moving on to other endeavors.

Wages for workers who stayed at their jobs were up 5.5% in November from a year earlier, averaged over 12 months, according to the Federal Reserve Bank of Atlanta. That was up from 3.7% annual growth in January 2022 and the highest increase in 25 years of record-keeping.

It’s also the case that new hires are getting bigger signing bonuses, initial salaries, and more perks for joining the company.

However, this claim by The Wall Street Journal (at the link above) is mostly backwards in the present environment:

Faster wage growth is contributing to historically high inflation….

It’s true that increasing wages—increasing labor costs generally—feeds into inflation as companies have to raise their prices when labor costs eat too far into their profit margins. However, as WSJ also noted,

Prices rose at their fastest pace in 40 years earlier in 2022.

That sharp rise in inflation actually began before the sharp rise in wages, and it has far outstripped the rise in wages: 2022’s inflation peaked above 9%, and it’s still around 7%. The current wage increase is only a nominal increase. The real change in wages, what real people spend on real necessities and wants, has been negative: that 5.5% nominal increase in November, compared with November’s 7.1% inflation for instance, actually represents a 1.6% decrease in actual buying power for us average Americans.

The fact is that the current period of high inflation is driving the rise in labor costs, not the other way around.