Employees in developed economies are going to see their pay increase by 2.5 percent in the second quarter, accelerating to as much as 3 percent next year according to an exclusive report from Bloomberg, citing estimates from JPMorgan Chase & Company. This is the highest pay bump expected since the eve of the 2009's worldwide recession.
If the uptrend in salaries is sustained, it could settle an economic debate over whether there is a pull-and-push relationship between tightening labor markets and rising wages. JPMorgan said the pay hike is happening as unemployment in world's richest economies fell to its lowest since 1980.
In the United States, workers are being paid at 2.9 percent more than the average hourly wages over a year in August. This the highest hourly wages saw since the recession ended in mid-2009 according to Bloomberg.
In Japan, salaries increase by 1.5 percent in July from a year ago and 3.3 percent in June, Bloomberg noted.
Some European countries are receiving wages at 2.2 percent higher in the second quarter, the highest since 2012. Workers in the United Kingdom are receiving 3.1 percent higher earnings in July compared to what they had been receiving since 2015.
Meanwhile, a separate report from New York State Comptroller Tom DiNapoli revealed that salary including bonuses in Wall Street increased by 13 percent to $422,500 in 2017, the highest since 2008 and the third-highest on record after adjusting for inflation.
The securities industry has the highest average salary among all industries in New York City, the report highlighted. The securities industry also accounted for 21 percent of all private sector wages in 2017 despite having fewer employees compared to other industries.
Interestingly, people in the securities industry on Long Island received wages nearly as high to that of being received in New York City. The region also saw pay bump by 10 percent in 2017, driven by hedge-funds firms operating in Suffolk Country. These firms are giving an average salary of about $599,800, the highest of any county in the United States.
New York City, on the other hand, is giving the highest average bonus in a decade and the fourth-highest on record excluding inflation. The average bonus received by securities industry employees increased by 17 percent to $184,200 in March.
JPMorgan warned that a rise in inflation that happens simultaneously to pay bumps will only eat up the salary increases of workers. The problem is that these two factors almost always happen at the same time. In fact, inflation is driven by the increase in wages since people are having more purchasing power.
Bloomberg also stressed that pay hikes are restricted by employees who prefer more flexible working hours, longer vacations, and better benefits than requesting a salary increase. Younger employees and women tend to desire more flexibility in the working environment than to aspire for a bigger income.
