Economists absorbing the new data out Friday kicked a few theories around for the surprisingly small increase, including that it could just be a statistical fluke, more noise than a signal of a shift in the leverage workers have had recently over employers. One popular explanation, though, was that a sharp uptick in lower-paid leisure and hospitality workers dragged the average down, just like massive layoffs among low-paid workers at the start of the pandemic caused average wages to spike. Another consideration: It’s evidence to some economists that we are not in the midst of (as some feared) a dreaded phenomenon called a wage-price spiral, where prices increase, causing workers to demand higher wages, causing businesses to raise prices to cover those wages, leading to a vicious cycle. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
