Early this year showed signs that the 2021 labor force market’s key feature, which saw a significant increase in worker compensation, is beginning to fade. Businesses’ need for workers seems to have cooled a little from its record-setting levels last year.

The first quarter of 2022 saw a 5% increase in wages and salaries for the private sector, compared to the previous year. This pace was the same as that of the fourth quarter of 2020, according to the U.S. Department of Labor reported Friday.

According to Nick Bunker (economic research director North America for Indeed Hiring Lab), this growth rate is still very strong relative to the pre-pandemic level of about 3%. The data suggest that growth could have stalled.

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Bunker explained that “wages are not growing at the pace they were last year for large parts of it.”

He said, “It’s an indication that some of those gains and bargaining power workers gained because of the exceptional circumstances of last year weren’t lasting.” They are not permanent parts of the labour market.

In order to be competitive for workers, employers began bidding up wages as early 2021. As the U.S. economy recovered from its pandemic crisis, businesses needed workers more quickly than people.  

Quickly, the job picture skewed in workers’ favorThe number of job opportunities jumped to new heights. Layoffs dropped to their lowest levels in decades. Wages rose at an unprecedented pace. Workers were tempted by better jobs elsewhere and voluntarily left their jobs.

Most pay gains are seen in traditional lower-paying services such as hospitality and leisure (e.g., jobs in hotels and bars).

The record levels of job openings and voluntary resignations remain near the highs reached at the close of 2021. But, just like wages growth, they seem to have stagnated. It suggests the labor market has become more stable as workers return to their jobs, and there is less demand from employers for labor. But, they are still beneficial.

Bunker explained, “It is a relative cooling. But it’s moving from 95 degrees to 98 degrees.” “It’s still fairly warm.”

Meanwhile, inflationWorkers’ high salaries have been eroded.

According to an Indeed survey, less than half (45%) of workers believed their wages would outpace inflation in March 2022. analysisPublished Thursday. This share is now at 58%, down from 58% in March 2021. (Purchasing power drops when inflation surpasses wages.