US Inflation Rate Reaches 8.6% in May, a 40-Year High, Pushing Wages Up

The US inflation rate reached 8.6 percent in May, its highest level since December 1981, the US Department of Labor (DOL) reported on June 10, putting pressure on employers to raise wages to keep pace. According to the June 3 employment report from the Bureau of Labor Statistics (BLS), wages continued to climb in May, driving concerns about an inflationary wage spiral.

A May survey of 337 US companies by pay consultancy Pearl Myer found that about one-third of organizations are considering or planning to provide midyear salary increases in 2022:

• 23 percent of companies are planning midyear salary adjustments in addition to their annually scheduled pay increases; and
• An additional 8 percent are considering this action.

"It is very unusual to see so many companies planning a second round of adjustments," said Rebecca Toman, vice president of the survey business unit at Pearl Meyer. "Normally, budgets are set well in advance for an annual rise. This is further indication that a shift is occurring—at least for now—when it comes to setting pay for the established workforce."

Most companies considering midyear increases said they would be focused on key employees, targeted job families, and top performers rather than granted across the board.