Richmond Fed, Report: Are Supersized Wage Increases Over?

“For construction workers at least, the days of outsized wage increases may not be over quite yet. According to the model, construction wages could outpace the overall average in the short run as the construction wage premium partially recovers toward its pre-pandemic level.”

“But many factors could complicate how wages actually unfold: This simple model ignores important factors like today’s historically low unemployment rate of 3.4 percent — which points to a tight labor market that could keep wage growth higher for longer — as well as borrowing rates which are higher today than before the pandemic, in turn increasing costs and lowering activity in the interest rate-sensitive construction industry.”