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    Only 17% of Workers Say Their Pay Has Matched Inflation

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    Wages are rising at their fastest pace in years, but prices are rising even faster.Americans have noticed.Only 17 percent of workers say they have received raises that kept up with inflation over the past year, according to a survey of 5,365 adults conducted last month for The New York Times by Momentive, the online research firm formerly known as SurveyMonkey. Most of the rest say either that they have received raises that lagged price increases or that they have received no raise at all; 8 percent of respondents said they had taken a pay cut.Nearly nine in 10 Americans say they are at least “somewhat concerned” about inflation, and six in 10 are “very concerned.” Worries about inflation cross generational, racial and even partisan lines: 95 percent of Republicans, 88 percent of independents and 82 percent of Democrats say they are concerned.Government data shows that wage gains are outpacing inflation in some corners of the economy, particularly the service sector, where competition for workers has driven rapid increases in pay. But in the aggregate, prices have risen faster than pay in recent months: The Consumer Price Index rose 6.8 percent in November, a nearly four-decade high; average hourly earnings rose 4.8 percent in November, and other measures likewise show pay gains lagging price increases.Worries about inflation are dragging down overall confidence in the economy, which is at the lowest level in the nearly five years Momentive has been conducting its survey. Republicans have been particularly pessimistic about the economy since President Biden took office a year ago, but in recent months, Democrats too have become more dour.“Pretty much the only group of people who say they’re better of now than they were a year ago are people who’ve gotten a pay raise that matches or beats inflation,” said Laura Wronski, a research scientist at Momentive.Despite their concerns, however, most Americans said inflation had not yet had a major effect on their finances — although low-income households reported having a harder time dealing with rising prices than other groups. And only 11 percent said they planned to ask for a raise if inflation continued. That could be comforting to officials at the Federal Reserve, who are watching warily for evidence of a “wage-price spiral,” in which rising prices lead workers to demand raises, leading employers to raise prices to pay for them.About the survey: Data in this article came from an online survey of 5,365 adults conducted by the polling firm Momentive from Dec. 14 to Dec. 19. The company selected respondents at random from the nearly three million people who take surveys on its platform each day. Responses were weighted to match the demographic profile of the population of the United States. The survey has a modeled error estimate (similar to a margin of error in a standard telephone poll) of plus or minus two percentage points, so differences of less than that amount are statistically insignificant. More

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    What We Learned About the Economy in 2021

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    For once, the government tried overheating the economy. For better and worse, it succeeded.For people who study the vicissitudes of the economy, 2021 has been the most interesting year of the 2000s.It hasn’t been the most dramatic (that would be 2008 or 2020), and neither the best (2000 or 2019) nor the worst (2009). Rather, it has been a year in which economic dynamics that had seemed entrenched for decades came apart, or changed in fundamental ways. Workers attained the upper hand over employers; supply chains broke; inflation surged; and the economy rebuilt itself from its depressed pandemic levels with astounding speed.In contrast to the last economic cycle, the government tried overheating the economy for once. For better and worse, it succeeded.The unemployment rate, 6.7 percent in December 2020, fell to 4.2 percent 11 months later. That same shift took three and a half years in the last expansion, from March 2014 to September 2017.But the flip side has been soaring prices and many goods in short supply. Inflation has reached its highest levels in four decades. In surveys, Americans are remarkably unsatisfied with economic conditions. The growth numbers have been good. The vibes have been bad.These are the most important things to learn from a year in which the economic ground beneath our feet shifted.Yes, you can overheat the economyIn the early months of 2021, there was vigorous disagreement between people in the centrist and left-of-center economics worlds. Was the $1.9 trillion pandemic rescue plan the Biden administration enacted, on the heels of a $900 billion bipartisan package passed in the final weeks of the Trump administration, too big relative to the hole the economy was in?For example, in February the Congressional Budget Office projected that the 2021 output gap — the economy’s shortfall relative to its full potential — was only $360 billion. Even if you think the C.B.O. numbers are too cautious, estimates like that implied that the pandemic relief that passed a month later would send too much money coursing through the economy and result in inflation.That, anyway, was the interpretation by traditional models of how fiscal stimulus works. Defenders of the Biden approach emphasized, among other things, risk management — doing everything possible to get money into Americans’ hands, aggressively roll out vaccination, and get the economy back to its prepandemic path as quickly as possible.These views were shaped in large part by the experience of the last expansion. Fiscal austerity was a major reason for a painfully long slog out of the global financial crisis. After years, or arguably decades, in which the central crisis was an under-heated economy, the experience of 2021 is a reminder that overheating can cause its own discontents.What to Know About Inflation in the U.S.Inflation, Explained: What is inflation, why is it up and whom does it hurt? We answered some common questions.The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.With demand for goods exceeding supply, especially for physical items, it is clear that the surging prices and other related problems (shortages and shadow inflation) are now America’s central economic problems. Economists will debate how much they are attributable to excess stimulus for years to come. But regardless of where one comes down on that question, the events of the last few quarters are a reminder that just because the risks of overheating were dormant for a long time doesn’t mean they’ve gone away.When supply chains get messed up, it is hard to un-mess themThe disruptions to supplies of all sorts of goods have their roots in the earliest weeks of the pandemic, when manufacturers the world over pulled back on production amid collapsing demand and a public health crisis.But things didn’t play out as in past recessions. Demand for physical goods surged in late 2020 and into 2021 — not like a typical recession in which demand for cars and other big-ticket items is depressed.That happened because consumers shifted their spending toward physical goods and away from services, and government support kept incomes stable, preventing a collapse in overall demand.The result: an economywide occurrence of the “bullwhip effect,” a phenomenon from the field of operations management in which small shifts in demand ripple through supply chains to cause wild swings.The complexity of modern global supply chains and the fact that this bullwhip effect has played out across countless industries has made it a fiendishly difficult problem to solve. The issue is not just a shortage of semiconductors, or shipping containers, or any other single item. It is shortages of all these things crashing together in ways that make the feeling of scarcity and shortages more intense.More power for workers doesn’t necessarily make workers happyThe tension between soaring demand and pandemic-limited supply showed up in the labor market in 2021 as well. The result was that workers were in command to a degree not seen in at least two decades.This showed up across multiple dimensions. Wages have been rising rapidly. Companies have been forced to be more creative, flexible and aggressive in attracting a work force. The rate of people quitting their jobs soared. After two decades in which employers were mostly able to have their pick of workers, the tables had turned.And people hated it.That’s an exaggeration, of course. The Great Resignation is real, and plenty of people have taken advantage of this moment to secure a better, more rewarding employment arrangement. But in the aggregate, people view the state of the economy as horrendous.In a Gallup poll in early December, 67 percent of adults said the economy was getting worse. Overall economic confidence matched its lowest levels from the early days of the pandemic and was lower than it was in the very weak economy of 2010 and 2011.Some of this is surely tied to the fact that prices are rising more quickly than average wages, which means an average worker’s purchasing power is declining. Wage gains have been highest, in percentage terms, in lower-paying industries. In effect, hourly workers have been securing raises, while middle-managers and white collar workers are, on average, losing significant ground.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    What Social Trends Told Us About the American Economy in 2021

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    If 2020 was the year that made Zoom a verb and imbued the phrase “online dating” with new meaning, 2021 was its annoying younger sibling. Things were not quite as novel and scary as the darkest early days of the pandemic and initial state and local lockdowns, but the year found new and creative ways to be bad.Shutdowns weren’t nearly as widespread, but continued waves of coronavirus infection caused factories to shutter and people to retrench from economic life. This was a year in which the Duke of Hastings replaced the Tiger King as a national obsession, vaccine cards became a passport to semi-normal life, and the internet lost its hive mind over America’s cream cheese shortage.Social trends like those can tell us a lot about the economy we’re living in. To wrap up 2021, we ran down what some of the big cultural moments and movements taught us about the labor market, economic growth and the outlook for 2022.The Everything ShortageSadly, it wasn’t just the schmear that ran out this year. Many, many things came up short in 2021. For a while, people tried to blame the fact that they couldn’t get hold of a couch or a used car on a ship stuck in the Suez Canal, but society eventually came around to the reality that we’ve all been buying so much stuff that we have collectively broken the supply chain.Government stimulus checks and savings amassed over long months at home have been fueling strong consumer spending, and the virus has shifted spending patterns away from services like restaurant meals and plane tickets and toward goods. Container ships, ports and factories couldn’t keep up with the unusual boom, especially as new virus waves spurred occasional shutdowns.Product shortages have raised prices, helping to push inflation up to the fastest pace in nearly 40 years. The big question is whether high inflation will continue in 2022. As the Omicron variant threatens to throw more kinks into global supply lines, economic policymakers worry that it will persist.An Anti-Work Era?About 1.5 million “idlers” and counting have joined a community on the site Reddit dedicated to “those who want to end work, are curious about ending work, want to get the most out of a work-free life.” If you were looking for a perfect expression of pandemic populist angst, that might be it: It’s replete with stories of bad bosses, workday abuses and both planned and spontaneous quits.Redditors weren’t alone in getting excited about leaving jobs this year. Americans quit their jobs at record rates, in what was labeled “The Great Resignation” or the “Big Quit.” Myriad essays and articles have tried to assess why people are throwing in the towel, but most agree that it has something to do with burnout after long months of exposure to public health risk or endless online hours during the pandemic.Some have suggested that a collective life-or-death experience has caused people to reassess their options, while others have suggested that the same government-padded savings that are allowing people to spend so much are giving them the wherewithal to be pickier about where they work and how much they are paid.Burned-Out BoomersThis may also have been the year that “OK, Boomer” ceded the floor to “You OK, Boomer?”A recent Federal Reserve survey of business contacts found that several “noted that baby boomers were leaving jobs and selling businesses to retire early — a trend that was due (1957 marked the peak year for births among baby boomers; those babies turn 65 next year) but has accelerated because of pandemic burnout.”That shows up in the data. People over the age of 45 have been slower to return to the job market since the start of the pandemic. That group includes members of Generation X, which ranges in age from 41 to 56, and baby boomers, who are roughly 57 to 75. It’s not clear if the apparent rush toward early retirement is going to stick: People may go back once the health scare of the pandemic is behind us, or if stocks return to less buoyant valuations, reducing the value of retirement portfolios.What happens next with the middle-age-and-up work force will be pivotal to the future of the labor market. If older workers stay out, America’s labor force participation rate — and the pool of workers available to employers — may remain depressed compared with levels that prevailed before the pandemic. That will be bad news for employers, who are increasingly desperate to hire.Generational Warfare, Skinny Jean EditionDon’t shed all of your tears for the baby boomers, because millennials also had a tough time in 2021. They divided the year between reminding the internet that they are graying, keeping Botox boutiques in business, and feeling aghast as Generation Z, their successors, accused them of being old. A generation that made the poorly informed decision to recycle the low-rise trend also had the gall to claim that side parts make people look aged and skinny jeans are out.Whether their elders are ready for it or not, the reality is that Gen Z, the group born from 1997 to 2012, began to enter adulthood and the labor market in full force during the pandemic. It is a comparatively small generation, but its members could shake things up. They are fully digital natives and have different attitudes toward, and expectations of, work life from those of their older counterparts.If office workers ever actually meet their new colleagues, things could get interesting.Everyone Hates ‘Hard Pants’Speaking of the office, this year put the initials “R.T.O.” firmly into the professional lexicon. Return-to-office planning was repeatedly upended by rolling waves of infection, but that didn’t stop cries of outrage. Many professionals began to question the utility of high heels and slacks — known derisively as “hard pants” — as opposed to their far more beloved and couch-friendly “soft pant” alternative.Whether the future of work-wear will involve more elastic waistbands remains an open question, but it is increasingly clear that America is unlikely to return to many of its old workday habits. Surveys of workers suggest that many did not miss the office, and employers are increasingly turning to hybrid work models and location flexibility, in part to avoid fueling further resignations.Travel Remained DepressedBorders closed, and opened, and closed again or included restrictions as waves of coronavirus tore across the world map this year. The same uncertainties facing national governments kept many travelers at or near home — international travel remains sharply depressed. Global tourism remained 76 percent below prepandemic levels through the third quarter, based on data from the World Tourism Organization.Aside from Emily, it seems that relatively few of us are making it to Paris these days. That’s bad news for travel-dependent industries, and one of the reasons that spending patterns are struggling to shift back toward services and away from furniture, exercise equipment and toys. That has kept inflation high across much of the world.Q.R. Codes Are on the MenuEven when we did shift our consumption dollars back to experiences, those were often much changed by the pandemic.A case in point: Many restaurants have moved to Q.R. codes instead of physical menus. Some of this is for sanitation, but companies are also turning to small doses of automation as a way to cut down on labor as employees are scarce. That has the potential to improve productivity. (The data so far on whether it’s working are mixed.) If companies do become more efficient, it could lay the groundwork for sustainably higher wages: The server who is now juggling twice as many tables as diners order from their phones can take home a fatter paycheck without chipping away at the restaurant’s profits.But it remains to be seen whether workers will win out as companies streamline their operations to meet the moment. So far, corporate profits have been soaring to record highs, but wage gains are not quite keeping up with inflation. Things are changing fast, so how that story develops will be a trend to watch in 2022. More

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    As Workers Gain Pay Leverage, Nonprofits Can’t Keep Up

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    Schools and social assistance agencies face staffing shortages as they compete with businesses able to raise wages — and services are suffering.In a Northern California school district, the superintendent is taking shifts as a lunchroom monitor. In Louisville, Ky., nonprofit groups are losing social workers to better-paying jobs at Walmart and McDonald’s. And in Rhode Island, child welfare organizations are turning away families from early-intervention programs because they are short of personnel.The nationwide labor shortage in recent months has led to delayed shipments, long waits at restaurants and other frustrations for customers and employers alike. But many for-profit businesses have been able to overcome their staffing difficulties, at least in part, by offering higher wages to attract workers.For many nonprofit and public-sector employers, however, raising pay isn’t an option, at least without persuading state legislators to approve budget increases or voters to approve higher taxes. That is leading to a wave of departures and rising vacancy rates as their salaries fall further behind their for-profit counterparts. And it is in some cases making it difficult for them to deliver the services they exist to provide.“We’ve lost our ability to be competitive,” said Carrie Miranda, executive director of Looking Upwards, a nonprofit in Middletown, R.I., that works with adults and children with intellectual and developmental disabilities and other health care needs. “When a new person comes to the door, I can’t say yes to them, and they desperately need the services.”Looking Upwards, like many similar organizations across the country, receives most of its funding through state contracts that pay a fixed reimbursement rate for the services they provide. In many states, including Rhode Island, funding levels had been failing to keep up with rising costs even before the pandemic.But the recent acceleration in wage growth, particularly in low-paying industries, has left them hopelessly behind the curve. At Looking Upwards, pay starts at $15.75 an hour for jobs that can be physically taxing and emotionally draining; the Wendy’s down the street is offering $17 an hour for some positions.“We used to compete with hospitals and other health care entities, and now we’re competing with the convenience stores, the fast food places, the coffee shops,” Ms. Miranda said. “I’ve heard more and more people say, ‘I’d love to stay in this job, I’m passionate about the work, but I need to feed my family, I have to pay my rent.’”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}When Steffy Molina graduated from college in 2017, she wanted a job where she could make a difference in the lives of people like her, an immigrant who spoke no English when she came to the United States at age 17. She moved to Providence, where she found a job with Family Service of Rhode Island, helping to arrange health care, nutrition support and other services for families with young children.Ms. Molina, now 27, found the work rewarding. But at $16 an hour, it was hard to make ends meet. Even after earning a master’s degree, she saw little path toward a livable wage.So Ms. Molina left Family Service shortly before the pandemic to take a better-paying job at a nonprofit that relied less on government contracts. And this year, she left nonprofit work to join a for-profit health care technology company, where she earns about $75,000 a year.Ms. Molina says she likes her new job, and still feels she is making a difference. But she misses being able to help families directly.“I loved the work, just the satisfaction of being able to work with a child or a family,” she said. “Even if they could have paid $18, I would have stayed.”Wage pressures aren’t hitting all nonprofits equally. Some organizations, mostly outside of social services, have endowments or other funding sources that make it easier for them to raise pay. And some states regularly adjust reimbursement rates to reflect prevailing wage levels or have used federal aid money to make ad hoc adjustments.Nonprofit employment has lagged in the recoveryChange since Feb. 2020 in employment among private-sector wage and salary workers

    Source: Current Population Survey via IPUMSBy The New York TimesBut government data suggests that the nonprofit sector as a whole is struggling to compete. Nonprofit organizations didn’t cut as many jobs as for-profit businesses early in the pandemic, but they have struggled to rehire: Total nonprofit employment in November was 4.8 percent below its prepandemic level, compared with a 1.5 percent employment gap in the for-profit sector, according to a New York Times analysis of Current Population Survey data. That is despite a sharp increase in demand for many nonprofit services during the pandemic.“We can’t just increase the cost of care,” said Micah Jorrisch, vice president at Maryhurst, a Kentucky nonprofit. “We aren’t Starbucks. We can’t add 50 cents to the cost of a cup of coffee.”At Maryhurst, which provides help to children suffering neglect and abuse, the staffing shortage was so severe that the board recently agreed to raise wages for frontline workers, in some cases by as much as 28 percent. But the organization didn’t receive any permanent increase in state funding to pay for those raises, meaning it will have to cut costs elsewhere or raise extra money from private donors.Neither approach is sustainable, Mr. Jorrisch said. And the organization still has a vacancy rate of about 30 percent — just this month, Maryhurst lost one of its longest-tenured supervisors to a job at Kroger, the supermarket chain.Many public-sector employers are facing similar problems. Billions of dollars of federal aid to state and local governments during the pandemic helped prevent the budget crises that some experts initially feared. But many local officials are wary of offering permanent wage increases based on short-term federal assistance.“It is very dangerous for us to set precedent using one-time funding to create larger salaries unless there is clarity that that funding will continue,” said John Malloy, superintendent of the San Ramon Valley Unified School District, east of Oakland, Calif.Mr. Malloy says his district has an unusually large number of vacant teaching positions. But as in many school districts, the larger challenge is outside the classroom, where they are competing more directly with rapidly rising private-sector wages. School bus drivers can earn far more making deliveries for Amazon. Cafeteria workers and custodians can make better money doing similar work at for-profit companies. This fall, Mr. Malloy resorted to asking central-office staff, including himself, to take shifts supervising students at lunchtime.Wages aren’t the only challenge. School superintendents say they are also battling burnout after close to two years of remote and hybrid learning, battles over mask and vaccine mandates, and other issues. And schools can’t offer remote work or flexible schedules to help compensate for lower pay.Similar issues face nonprofits, especially those involved in child welfare, mental health and other direct services. Demand for many services has soared during the pandemic, straining already thin staffs. Education and human services also disproportionately employ women, who have borne the brunt of the child care crisis that has emerged during the pandemic.Most economists expect the rapid wage growth among lower-paid workers to slow as the pandemic eases and more people return to the labor force. But even if the immediate staffing trouble abates, it could have long-term consequences. People who leave the field in search of better pay could be unlikely to return. And students won’t choose the field if they don’t believe they can earn a livable wage.“It’s a field that’s becoming unattractive,” said Beth Bixby, chief executive officer of Tides Family Services, a Rhode Island nonprofit.Ms. Bixby said one veteran employee, who works in a program for at-risk children, had recently told her that she was earning the same amount — $17 an hour — as her 17-year-old daughter, who works part time at a cosmetics retailer.“It’s demoralizing,” Ms. Bixby said. More

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    Kellogg Workers Ratify Contract After Being on Strike Since October

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    About 1,400 striking Kellogg workers have ratified a new contract, their union said Tuesday, ending a strike that began in early October and affected four of the company’s U.S. cereal plants.“Our striking members at Kellogg’s ready-to-eat cereal production facilities courageously stood their ground and sacrificed so much in order to achieve a fair contract,” Anthony Shelton, the president of the workers’ union, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said in a statement. “This agreement makes gains and does not include any concessions.”Steve Cahillane, the company’s chairman and chief executive, said in a statement that he was pleased that the workers approved the deal. “We look forward to their return and continuing to produce our beloved cereal brands for our customers and consumers,” he added.The strike had become especially contentious after workers rejected an agreement on a five-year contract between their union and the company in early December, and the company announced that it would move ahead with hiring permanent replacement workers.President Biden waded into the dispute a few days later, saying in a statement that the plan to replace workers was “deeply troubling” and calling it “an existential attack on the union and its members’ jobs and livelihoods.”The company and the union announced the second tentative agreement the next week, just before Senator Bernie Sanders, an independent from Vermont, was scheduled to hold a rally on behalf of workers in Battle Creek, Mich., home of the company’s headquarters and one of the cereal plants where workers had walked off the job.The contract dispute revolved partly around the company’s two-tier compensation system, in which workers hired after 2015 typically received lower wages and less generous benefits than veteran workers. The company has said that the longer-tenured workers make more than $35 an hour on average, while the more recent workers average just under $22 per hour.Veteran workers had complained that the two-tier system put downward pressure on their wages and benefits because they could effectively be outvoted or replaced with newer, cheaper workers.Under the agreement that workers rejected in early December, the company would have immediately granted veteran pay and benefit status to all workers with four or more years’ experience at Kellogg. It would have also granted veteran status to a number equal to 3 percent of a plant’s head count in each year of the contract.The initial agreement would have given veteran workers a 3 percent wage increase in the first year and cost-of-living adjustments.In the agreement that workers just approved, the proposal for converting newer workers to veteran status remained unchanged, but the company expanded cost-of-living wage adjustments to cover all employees in each year of the contract, according to a Kellogg spokeswoman.Newer workers will see their wages immediately rise to just over $24 an hour and veteran workers will immediately receive a wage increase of $1.10 per hour. More

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    What Causes Inflation and Should I Worry About It?

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    What is inflation, why is it up and whom does it hurt? A run through common questions about the ongoing price burst.Inflation has become central to the American zeitgeist in 2021 in a way that it hadn’t been for decades. Google searches are up. Supply chain issues feature into popular Instagram posts. The satire website The Onion warned in a recent headline that “higher prices may force Americans to eat reasonable portions on Thanksgiving.”Even as inflation hits its highest level since 1982 and inserts itself as a topic of popular discussion, trying to understand it can be a mind-bending task. Some people who have studied markets and the economy for years often do not know the ins and outs of how inflation is calculated. Its aftereffects on society — from who wins and who loses to whether it is good or bad news — are nuanced.Here’s a guide to help explain what inflation is, including how it is measured and what it means for your economic security and savings.What is inflation?Inflation is a loss of purchasing power over time: It means your dollar will not go as far tomorrow as it did today.Inflation is typically expressed as the annual change in prices for a basket of goods and services. In the United States, there are two main inflation gauges.One, the Consumer Price Index or C.P.I., measures the cost of things urban consumers buy out of pocket. The other, the Personal Consumption Expenditures index, or P.C.E., is released at more of a lag and measures things people consume, including things they do not pay for directly — notably health care, which insurance and government benefits help to cover. The two indexes are also built slightly differently.The Federal Reserve, America’s central bank and the institution in charge of keeping prices from increasing too rapidly, targets 2 percent annual increases in the P.C.E. index on average over time. A little bit of consumer price inflation is generally viewed as desirable, in part because it gives companies room to adjust to a changing economy — one where labor and commodities might cost more — without being forced out of business.What causes inflation?In the short term, high inflation can be the result of a hot economy — one in which people have a lot of surplus cash or are accessing a lot of credit and want to spend. If consumers are buying goods and services eagerly enough, businesses may need to raise prices because they lack adequate supply. Or companies may choose to charge more because they realize they can raise prices and improve their profits without losing customers.But inflation can — and often does — rise and fall based on developments that have little to do with economic conditions. Limited oil production can make gas expensive. Supply chain problems can keep goods in short supply, pushing up prices.The inflationary burst America has experienced this year has been driven partly by quirks and partly by demand.What to Know About Inflation in the U.S.The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.Who’s to Blame for Rising Prices?: Here are the most obvious candidates — and where the evidence looks strongest.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.On the quirk side, the coronavirus has caused factories to shut down and has clogged shipping routes, helping to limit the supply of cars and couches and pushing prices higher. Airfares and rates for hotel rooms have rebounded after dropping in the depths of the pandemic. Gas prices have also contributed to heady gains recently.But it is also the case that consumers, who collectively built up big savings thanks to months in lockdown and repeated government stimulus checks, are spending robustly and their demand is driving part of inflation. They are continuing to buy even as costs for exercise equipment or outdoor furniture rise, and they are shouldering increases in rent and home prices. The indefatigable shopping is helping to keep price increases brisk.Where is inflation headed and should I be worried?Officials say they do not yet see evidence that rapid inflation is turning into a permanent feature of the economic landscape, even as prices rise very quickly: The C.P.I. measure rose by 6.8 percent in the year through November, the fastest pace since 1982.There are plenty of reasons to believe that the price burst will fade. Much of the increase this year owes to shortages of goods — from bicycles to cars and beds — that are likely to eventually ease as companies figure out how to produce and transport what people want to buy in a pandemic-altered economy. Many households also have built up savings, in part because of repeated stimulus payments, but they eventually could exhaust those.Plus, before the pandemic, aging demographics and high inequality in income and wealth had combined to drag inflation steadily lower for years as people preferred to save money instead of spending it, and those basic economic building blocks haven’t changed.But there are concerning signs that inflation is becoming stickier, meaning that it might last rather than fading with time. Rents have picked up sharply as home prices have risen and would-be buyers have found themselves locked out of ownership. Consumers are slowly starting to anticipate higher prices, though long-term inflation expectations have yet to jump drastically higher.In the longer term, the (sometimes contested) theory goes, high inflation can become entrenched if workers begin to expect it and can successfully negotiate wage increases to cover their climbing costs. Companies, facing higher labor bills, may manage to pass the costs onto consumers — and voilà, you have a situation where pay and prices push one another steadily upward.Is inflation bad?Whether inflation is “bad” depends on the circumstances.Most everyone agrees that super fast price increases — often called hyperinflation — spell trouble. They destabilize political systems, turn middle-class workers into paupers overnight, and make it impossible for businesses to plan. Weimar Germany, where hyperinflation helped to usher Adolf Hitler into power, is often cited as a case in point.Moderate price gains, even ones a bit above the Fed’s official goal, are a topic of more-serious debate. Slightly higher inflation can be good for people who owe money at fixed interest rates. If I sell coconuts for $1 and owe my bank $200 today, but next year I am suddenly able to charge $1.05 for my coconuts, my debt becomes easier for me to pay back: Now I only have to sell a little bit over 190 coconuts plus interest.But inflation can be tough for lenders. The bank to whom I owe my $200 is obviously not happy to get 190 coconuts worth of money instead of 200 coconuts worth. While politicians and the public rarely cry for bankers, the same is true for people with savings that bear low interest: Their holdings will not go as far. Inflation can be especially tough for people on fixed incomes, like students and many retirees.For workers taking home paychecks, whether inflation is a good or bad thing hinges on what happens with wages. If a worker’s pay goes up faster than prices increase, they can still find themselves better off in a high-inflation environment.Wages are growing quickly right now, especially for lower earners, but some measures suggest the growth is not keeping pace with inflation as it picks up steeply. Still, many households are also receiving transfers from the government — including an expanded Child Tax Credit — which could keep some families’ financial situations from deteriorating.How does inflation affect the poor?High or unpredictable inflation that isn’t outmatched by wage gains can be especially hard to shoulder for poor people, simply because they have less wiggle room.Poor households spend a bigger chunk of their budgets on necessities — food, housing and especially gas, which is often a contributor to bouts of high inflation — and less on discretionary expenditures. If rich households face high inflation and their wages do not keep up, they may have to cut back on vacations or dining out. A poor family may be forced to cut back on essentials, like food.“For lower income households, price increases eat up more of their budget,” said Laura Rosner-Warburton, a senior economist at MacroPolicy Perspectives, pointing out that some research suggests that poor people may even end up paying comparatively more for the same products. That may be partly because they lack the free cash to take advantage of temporary discounts.Around the world, poor people historically have reported greater concern around inflation, and that is also the case in the United States in the current episode.How does inflation affect the stock market?Really high inflation typically spells trouble for stocks, said Aswath Damodaran, who teaches corporate finance and valuation at New York University’s Stern School of Business. Financial assets in general have historically fared badly during inflation booms, Mr. Damodaran said, while real assets like houses have better held their value.The reason is simple.“You need to make higher returns to break even,” he explained. While it might have been attractive to invest money for a 3 percent annual payback before an inflationary burst, once inflation has taken off to 4 percent, your investment would actually be declining in terms of real-world purchasing power.Plus, inflation can be tough on the underlying business. Companies that lack pricing power — meaning that they cannot easily pass costs on to customers — suffer the worst, because they are forced to absorb input cost increases by taking a hit to their profit margin.High inflation can also spur the Federal Reserve to increase interest rates as it tries to cool off the economy and slow demand. If the central bank does so drastically, it could even plunge the economy into a recession, which would also be bad for stocks — along with everyone else.“The worse inflation is, the more severe the economic shutdown has to be to break the back of inflation,” Mr. Damodaran said. More

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    Workers in Europe Are Demanding Higher Pay as Inflation Soars

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    Prices are rising at the fastest rate on record, and unions want to keep up. Policymakers worry that might make inflation worse.PARIS — The European Central Bank’s top task is to keep inflation at bay. But as the cost of everything from gas to food has soared to record highs, the bank’s employees are joining workers across Europe in demanding something rarely seen in recent years: a hefty wage increase.“It seems like a paradox, but the E.C.B. isn’t protecting its own staff against inflation,” said Carlos Bowles, an economist at the central bank and vice president of IPSO, an employee trade union. Workers are pressing for a raise of at least 5 percent to keep up with a historic inflationary surge set off by the end of pandemic lockdowns. The bank says it won’t budge from a planned a 1.3 percent increase.That simply won’t offset inflation’s pain, said Mr. Bowles, whose union represents 20 percent of the bank’s employees. “Workers shouldn’t have to take a hit when prices rise so much,” he said.Inflation, relatively quiet for nearly a decade in Europe, has suddenly flared in labor contract talks as a run-up in prices that started in spring courses through the economy and everyday life.From Spain to Sweden, workers and organized labor are increasingly demanding wages that keep up with inflation, which last month reached 4.90 percent, a record high for the eurozone. Austrian metalworkers wrested a 3.6 percent pay raise for 2022. Irish employers said they expect to have to lift wages by at least 3 percent next year. Workers at Tesco supermarkets in Britain won a 5.5 percent raise after threatening to strike around Christmas. And in Germany, where the European Central Bank has its headquarters, the new government raised the minimum wage by a whopping 25 percent, to 12 euros (about $13.60) an hour.A market in Frankfurt. Inflation in the eurozone last month reached 4.90 percent, a record high.Felix Schmitt for The New York TimesThe upturns follow a bout of anemic wage growth in Europe. Hourly wages fell for the first time in 10 years in the second quarter from the same period a year earlier, although economists say pandemic shutdowns and job furloughs make it hard to paint an accurate picture. In the decade before the pandemic, when inflation was low, wages in the euro area grew by an average of 1.9 percent a year, according to Eurostat.The increases are likely to be debated this week at meetings of the European Central Bank and the Bank of England. E.C.B. policymakers have insisted for months that the spike in inflation is temporary, touched off by the reopening of the global economy, labor shortages in some industries and supply-chain bottlenecks that can’t last forever. Energy prices, which jumped in November a staggering 27.4 percent from a year ago, are also expected to cool.The E.C.B., which aims to keep annual inflation at 2 percent, has refrained from raising interest rates to slow climbing prices, arguing that by the time such a policy takes effect, inflation would have eased anyway on its own.“We expect that this rise in inflation will not last,” Christine Lagarde, the E.C.B. president, said in an interview in November with the German daily F.A.Z., adding that it was likely to start fading as soon as January.In the United States, where the government on Friday reported that inflation jumped 6.8 percent in the year through November, the fastest pace in nearly 40 years, officials are not so sure. In congressional testimony last week, the Federal Reserve chair, Jerome H. Powell, stopped using the word “transitory” to describe how long high inflation would last. The Omicron variant of the coronavirus could worsen supply bottlenecks and push up inflation, he said.In Europe, unions are also agitated after numerous companies reported bumper profits and dividends despite the pandemic. Companies listed on France’s CAC 40 stock index saw margins jump by an average of 35 percent in the first quarter of 2021, and half reported profits around 40 percent higher than the same period a year earlier.Justine Negoce, a cashier at Leroy Merlin, with her daughters. She joined a companywide walkout in Paris last month demanding a pay increase.Andrea Mantovani for The New York TimesWorkers say that they have not benefited from such gains, and that inflation has made things worse by abruptly slashing their purchasing power. Companies, for their part, are wary of linking salaries to inflation — a policy that also makes the European Central Bank nervous.Surging energy costs have been “a shock on incomes,” said James Watson, chief economist for Business Europe, the largest business trade association. “But if you try to compensate by raising wages, there’s a risk that it’s unsustainable and that we enter into a wage-price spiral,” he said.European policymakers are watching carefully for any signs that companies are passing the cost of higher wages on to consumers. If that happens, it could create a dangerous run-up of higher prices that might make inflation chronic.For now, that seems unlikely, in part because wage negotiations so far haven’t resulted in outsize pay increases, said Holger Schmieding, chief economist at Berenberg Bank in London.Negotiated wage increases have been averaging around 2.5 percent, below inflation’s current pace. “Will wage hikes be inflationary? Not really,” he said. “The eurozone is not at a severe risk.”But as climbing prices continue to unnerve consumers, labor organizations are unlikely to ease up. Gasoline prices recently hit €2 a liter in parts of Europe — equal to over $8 a gallon. Higher transportation costs and supply chain bottlenecks are also making supermarket basics more expensive.Ms. Negoce is facing a 25 percent jump in grocery and gas bills for her family. Even with a pay raise next year, “we’ll need to count every penny,” she said.Andrea Mantovani for The New York TimesJustine Negoce, a cashier at France’s largest home-improvement chain, joined an unprecedented companywide walkout in Paris last month to demand a hefty raise as rising prices gobbled up her modest paycheck.After employees blocked warehouses for 10 days and demonstrated in the cold, the company, Leroy Merlin, agreed to a 4 percent raise for its 23,000 workers in France — twice the amount that management originally offered. The company, owned by Adeo, Europe’s biggest DIY chain, saw revenue climb over 5 percent in 2020 to €8 billion as housebound consumers decorated their homes and people like Ms. Negoce worked the front lines to ring up sales.Her monthly take-home pay will rise in January to €1,300 from €1,250. The additional cash will help offset a 25 percent jump in grocery and gas bills for her two teenage children and husband — just barely.On a recent trip to the supermarket, her basket of food basics, including rice, coffee, sugar and pasta, jumped to €103 instead of the €70 to €80 she paid a few months back. Filling her gas tank now costs €75 instead of €60. And even with her husband’s modest salary, she said, the couple will still be in the red at the end of the month.“We’re happy with the raise, because every little bit helps,” Ms. Negoce said. “But things are still tight, and we’ll need to count every penny.”In a statement, Leroy Merlin said the agreement maintains employees’ purchasing power and puts its average salaries for next year at 15 percent above France’s gross monthly minimum wage, which the government raised in October by 2.2 percent.Crucially, executives also agreed to return to the bargaining table in April if a continued upward climb in prices hurts employees.At Sephora, the luxury cosmetics chain owned by LVMH Moët Hennessy Louis Vuitton, some unions are seeking an approximately 10 percent pay increase of €180 a month to make up for what they say is stagnant or low pay for employees in France, many of whom earn minimum wage or a couple hundred euros a month more.Jenny Urbina, a representative of the union that is negotiating with Sephora for salary increases. “When we work for a wealthy group like LVMH no one should be earning so little,” she said.Andrea Mantovani for The New York TimesLVMH, which recorded revenue of €44.2 billion in the first nine months of 2021, up 11 percent from 2019, raised wages at Sephora by 0.5 percent this year and granted occasional work bonuses, said Jenny Urbina, a representative of the Confédération Générale du Travail, the union negotiating with the company.Sephora has offered a €30 monthly increase for minimum wage workers, and was not replacing many people who quit, straining the remaining employees, she said.“When we work for a wealthy group like LVMH no one should be earning so little,” said Ms. Urbina, who said she was hired at the minimum wage 18 years ago and now earns €1,819 a month before taxes. “Employees can’t live off of one-time bonuses,” she added. “We want a salary increase to make up for low pay.”Sephora said in a statement that workers demanding higher wages were in a minority, and that “the question of the purchasing power of our employees has always been at the heart” of the company’s concerns.At the European Central Bank, employees’ own worries about purchasing power have lingered despite the bank’s forecast that inflation will fade away.A spokeswoman for the central bank said the 1.3 percent wage increase planned for 2022 is a calculation based on salaries paid at national central banks, and would not change.But with inflation in Germany at 6 percent, the Frankfurt-based bank’s workers will take a big hit, Mr. Bowles said.“It’s not in the mentality of E.C.B. staff to go on strike,” he said. “But even if you have a good salary, you don’t want to see it cut by 4 percent.”Léontine Gallois More

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    Here's Why Inflation Is Worrying Washington

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    Price gains have moved up sharply for months, but the fact that the trend is lasting and broadening has newly put policymakers on red alert.Aquan Brunson, 45 and from Brooklyn, used to buy three slices of cheese pizza from 99 Cents Pizza of Utica for lunch each day. But about three months ago, inflation ate away that third slice. The shop has pasted over its old sign to alert customers that it is now “$1.50 Hot Pizza.”“The dollar doesn’t take us far,” said Mr. Brunson, patting his greasy lunch down with paper napkins on a gray December afternoon. “The cost of everything is going up.”Consumers across the country can tell you that inflation has been high this year, evidenced by more expensive used cars, pricier furniture and the ongoing demise of New York City’s famous dollar slice. But until recently, policymakers in Washington responded to it with a common refrain: Rapid price increases were likely to be transitory.Last week, policymakers said it was time to retire the label “transitory,” and acknowledged that the price increases have been proving more persistent than expected.Jerome H. Powell, the Fed chair, said that while his basic expectation is that price gains will cool off, there’s a growing threat that they won’t do so soon or sufficiently.“I think the risk of higher inflation has increased,” he said.A fresh report set for release on Friday is expected to reinforce that concern. The Consumer Price Index could show that inflation picked up by 6.8 percent over the past year, the fastest pace in nearly 40 years. More worrisome for the Fed is that inflation is broadening to many products and services, not just those directly affected by the supply chain woes that have driven up prices for cars and electronics.Here is a rundown about what to know about the price pops sweeping America and the world — and what to expect when new U.S. consumer price inflation figures are released on Friday.Inflation measures price increases.When economists and policymakers talk about “inflation,” they typically mean the increase in prices for the things that people buy out of pocket — tracked by the Consumer Price Index, or C.P.I. — or the change in the cost of things that people consume either out of pocket or through government payments and insurance, which is tracked by the less-timely Personal Consumption Expenditures index.Both measures are way up this year, and C.P.I. data set for release on Friday is expected to show that inflation picked up by the most since 1982. Back then, Paul Volcker was the Fed chair, and he was waging a war on years of rapid price gains by pushing interest rates to double digits to cripple business and consumer demand and cool off the economy. Today, interest rates are set at near-zero after policymakers slashed borrowing costs at the beginning of the pandemic.Price gains are becoming broader.There are plenty of differences between 1982 and today. Inflation had been low for years leading up to 2021, and pandemic-era lockdowns and the subsequent reopening are behind much of the current price pop.Consumer demand surged just as rolling factory shutdowns and a reshuffle in spending to goods from services caused manufacturing backlogs and overwhelmed ports. That’s why policymakers were comfortable dismissing high inflation for a while: It came from kinks that seemed likely to eventually work themselves out.But price gains are increasingly coming from sectors with a less clear-cut, obviously temporary pandemic tieback. Rents, which make up a big chunk of inflation, are rising at a solid clip.“Housing — that is the key broadening,” said Laura Rosner, an economist at MacroPolicy Perspectives.The potential for wider and more lasting price pressures have put Fed officials on edge. Policymakers at the central bank, who had been slowly tiptoeing away from supporting the economy, broadcast clearly last week that they are preparing to speed up the retreat.“They know this report is coming,” Ms. Rosner said of Friday’s anticipated number. “It’s going to confirm and explain why we’ve seen such a sharp shift.”Supply chain snarls are lasting.Abdul Batin, owner of 99 Cents Pizza of Utica, plans to rebrand his Brooklyn pizza store as “$1.50 Pizza of Utica.”Jeanna Smialek/The New York TimesDisruptions to the global flow of goods are not fading as quickly as policymakers had hoped. Additional virus waves have kept factories from running at full speed in Asia and elsewhere. Shipping routes are clogged, and consumers are still buying goods at a robust pace, adding to backlogs and making it hard for the situation to normalize.Households have some $2.5 trillion in excess savings, thanks in part to pandemic-era stimulus, which could help to keep them buying home gym equipment and new coffee tables well into next year.“The earliest we see things normalizing is really the end of 2022,” said Phil Levy, chief economist at the logistics firm FlexPort. When it comes to misunderstanding inflation, he said, “part of the problem is that we treated the supply chain like it was a special category, like food or energy.”But as 2021 has made inescapably clear, the global economy is a delicately balanced system. Take the car industry: Virus-spurred semiconductor factory shutdowns in Taiwan delayed new car production. Given the dearth of new autos, rental car companies had to compete with consumers for previously owned vehicles, leaving shortages on used car lots. The chain reaction pushed prices higher at every link along the way.Global snarls have also helped to push up food prices, as Abdul Batin, owner of 99 Cents Pizza of Utica, can attest. He plans to rebrand it as “$1.50 Pizza of Utica,” and explains that while some customers balked at the cost increase, he couldn’t help it.“Everything is going up right now — cheese, flour, even the soda price,” he said.Wages are also rising.A grocery store in Queens, N.Y. Global snarls have also helped to push up food prices.George Etheredge for The New York TimesAnother thing that could keep inflation high? Wages are climbing swiftly, and some companies have begun to talk about passing those rising expenses onto customers, who seem willing and able to pay more. The Employment Cost Index, a measure the Fed watches closely, picked up notably in the three-month period that ended in September.The risk is that this is an early, and still dim, echo of the kind of wage-and-price dynamic that helped to fuel higher prices in the 1970s and 1980s. Back then, unions were a much more powerful force, and they helped to make sure pay kept up with rising prices. Inflation and wage gains pushed each other into an upward spiral, to the point that price increases leapt out of control and demanded a Fed response.In the years since, workers have typically had less formalized bargaining power. But employers are contending with labor shortages as the virus keeps many would-be employees on the sidelines and as demand booms. That is giving workers the ability to command higher pay as they face climbing costs themselves, and it is prompting many employers to lift wages to compete for scarce talent. That could keep demand solid by bolstering peoples’ wherewithal to spend.“Looking ahead, businesses across all major sectors foresee continued widespread wage hikes,” the New York Fed reported in its section of the Fed’s Beige Book, an anecdotal survey of business and labor contacts carried out by regional Fed banks.In Atlanta’s region, the Beige Book noted, “several contacts mentioned that labor costs were already being passed along to consumers with little resistance, while others said plans were underway to do so.”Mr. Brunson — the pizza aficionado — works at a grocery store. They’ve raised his pay, he said, but it is not enough to keep up with climbing cost of food and other expenses.“They gave us an extra dollar, but that’s just to offset the inflation,” he said. He and his family, three adult children who live with him, are coping by cutting back. “No eating out, less food, less meat.” More