"The 'Job Paradise' Era Is Over"... US Entry-Level Salaries Plummet 17% in One Year

Wage 'Bubble' That Rose During the Pandemic Bursts
IT Industry Starting Salaries Down 17%... Insurance and Finance Strong
"Wage Growth Rate Will Not Keep Up with Inflation"

It has been revealed that American companies are lowering the wages of workers, which they had significantly raised during the COVID-19 pandemic period.

On the 21st (local time), The Wall Street Journal (WSJ) reported, "The era of 'wage increases and a job boom' appears to be over," stating that companies struggling with labor shortages for three years are returning to their pre-pandemic state.

WSJ analyzed the first-year salaries of over 20,000 new job postings on the U.S. job platform 'ZipRecruiter' and found that the average wages have sharply declined compared to last year.

In particular, the main industry that lowered average wages was the information and communication technology (IT) sector. Starting salaries for new workers in the IT industry fell by about 17% compared to 2021 and 2022. The starting salary decline rates for delivery, courier, transportation, and storage services, entertainment industry, and manufacturing were -15%, -12%, and -10%, respectively.

WSJ reported, "This phenomenon is prominent in the advanced IT industry, delivery, courier, transportation, and storage services, and manufacturing sectors, which had the highest new employment and wage growth rates during the pandemic."

During the pandemic, the U.S. labor market showed signs of overheating, as there were far more companies seeking to hire workers than job seekers. In January of this year, the U.S. unemployment rate was recorded at 3.4%, the lowest level since May 1969.

With the spread of non-face-to-face and contactless culture, remote work increased, and there was also a trend of preferring part-time or irregular jobs over full-time positions. Especially in the IT industry, due to labor shortages, wages were raised significantly to massively expand new personnel. Delivery and courier services showed similar trends.

However, the finance and insurance sectors saw about a 3% increase compared to 2021 and 2022, and the health services sector saw wages rise by more than 22%. Compared to the wage decline phase in the IT industry, the strength of traditionally high-paying insurance, finance, and health services sectors stands out.

Julia Pollak, Chief Economist at ZipRecruiter, said, "The U.S. Department of Labor announced this month that the wage growth rate for workers is still positive at 5.7%. However, that is because new hires account for only 4% of the total workforce," suggesting that new hiring and starting salary growth rates are on a downward trend.

WSJ predicted, "Although the U.S. economy, which was expected to enter a recession, is still in good condition, no more 'bubbles' are occurring in the labor market," and "soon, wage growth rates will fall below inflation rates."