(Bloomberg Report) — Friday’s labor market report comes in a period of greater worker turmoil than any time in the past decade.

Unions representing employees from Deere (NYSE:) & Co. to Kellogg (NYSE:) Co. aren’t backing down in their efforts to secure better working terms and conditions. That follows decisions by other high-profile companies such as McDonald’s (NYSE:) Corp. and Chipotle Mexican Grill Inc (NYSE:). to raise pay in a battle to attract and retain workers that’s pushed up wages the most on record.

Economists predict that wage growth will slow as Americans are more likely to return to work and the competition for labor becomes less fierce. According to the Labor Department, the U.S. will add 450,000 new workers to its payrolls in October. This would mark the largest increase since July.

Constantly increasing pay means that there is an increased risk of businesses raising prices to keep margins healthy as costs for labor, transportation and materials rise. That could culminate in a vicious cycle as inflation’s erosion of consumer purchasing power encourages greater wage demands.

That’s not a scenario Federal Reserve Chair Jerome Powell sees playing out. At the conclusion of the central bank’s policy meeting Wednesday, Powell said that if wages were to rise materially above inflation and productivity growth, “that could put downward pressure on margins and cause employers to raise prices as a result. We don’t have evidence of that yet.”

Continue reading: Powell plays on inflation easing as the Fed waits for more jobs

In the third quarter, a measure of unemployment costs increased at its fastest ever rate. Wages and salaries have also risen for seven consecutive month. Meanwhile, the Fed’s preferred inflation gauge is at its highest level in 30 years on an annual basis, running well above its 2% target and adding to speculation that the central bank will raise rates sooner than expected. 

If wage growth doesn’t simmer down as expected, the Fed would have to start raising rates “as soon as June, and all asset prices would be under severe pressure,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note.

So far, wage gains in most industries are “more than offset” by inflation, said Omair Sharif, president of research company Inflation Insights LLC. In a note, Sharif stated that the Fed could not react in the immediate future because of this.

The Fed said in a statement Wednesday that while inflation is elevated, it is “largely reflecting factors that are expected to be transitory.” Policymakers will begin tapering the Fed’s bond-buying program later this month, but Powell said that there is “no direct signal” that should be taken about interest rate hikes from the taper decision.

Continue reading: American Women Gain Clout In Unions After Pandemic Sacrifices

According to the Bureau of Labor Statistics, there were 6,200 strikers as of October. This is nearly twice the number of 3,800 workers a month prior. This includes employees of four Kellogg cereal factories as well as Mercy Hospital medical staff in Buffalo. 

Members of the United Auto Workers union rejected a second deal with Deere — which the company said was its “best and final offer” — that proposed big improvements over one that workers turned down before going on strike. The wage increase was larger than nearly a dozen other collective bargaining agreements the UAW has negotiated since 2018, according to Bloomberg Law’s database of labor contracts.

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