(Bloomberg). Low-earning employees are being recruited at higher rates that other income brackets. This is driving up wages and increasing costs for employers.

Supply-chain disruptions and the pandemic have played major roles in this move. However, the bottom line was that while demand increased in 2021, Corporate America failed to catch up with worker demands for better wages and safety. 

“What’s interesting is that wage growth is strong…but it’s only outpacing inflation in the low wage-paying sectors because that’s where we’ve got the most shortage of labor. People are having to pay up to get people to work,” Ellen Zentner, Morgan Stanley’s chief U.S. economist, said in a Bloomberg TV interview. “As inflation comes down, and wages remain strong, we should get real wages growing across all income segments.” 

Walmart (NYSE.) Inc. is the largest employer in America. The retailer’s average wage nationwide is $16.40 per hour with some starting salaries as high as $17 per hour. Walmart’s average wage was around $14 an hour in February.  It still falls behind the costco wholesale corp (NASDAQ) workers. And Target Corp. (NYSE:) make. 

As a result, the rising demand for labor is eating into bottom lines at some of America’s biggest companies. In its third quarter earnings, McDonald’s (NYSE:) Corp. said it expected 2021 wages to rise 10% from 2020 compared with a 4% increase in commodity costs. Amazon.com Inc. (NASDAQ :)., Starbucks Corp (NASDAQ:). are facing pushes for unionization, and Deere (NYSE:) & Co. recently resolved it’s biggest worker strike in decades.

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