Labor Costs Surge in First Quarter, Fueling Inflation

Reuters (04/29/22) Mutikani, Lucia

U.S. labor costs surged by the most in 21 years in the first quarter, according to the U.S. Department of Labor. The employment cost index jumped 1.4% last quarter after advancing 1.0% in the October-December period. Economists polled by Reuters had forecast the index climbing 1.1% in the first quarter. Last quarter’s increase was the largest since the current series started in 2001.

Labor costs soared 4.5% on a year-to-year basis after increasing 4.0% in the fourth quarter. Wages and salaries increased 1.2% last quarter after rising 1.0% in the fourth quarter. They were up 4.7% year-to-year. High inflation eroded the gains for employees. Inflation adjusted wages dropped 3.6% year-to-year. Benefits jumped 1.8% after increasing 0.9% in the October-December quarter.

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