The Bureau of Labor Statistics’s (BLS) August jobs report delivered an unexpectedly positive signal for the job market, as employers reported far higher than expected job gains of 162,000, and labor force participation rose after falling for eight months straight. While August’s jobs data was largely positive, there was one area that wasn’t so bright for workers: wages.

In-waged. Average hourly earnings in August rose just 3.1% over the prior 12 months to $37.75, the BLS reported in its latest employment situation data, released on Friday. With annual wage growth in July also declining to 3.2% from 3.4% in June, this summer marks the lowest annual average wage growth since mid-2021, when the US was emerging from the Covid-19 recession and on its way to the “Great Resignation,” which prompted a two-year marathon of job hopping-related pay raises. Wages have also continued to lag behind inflation, which was up 3.4% over the last 12 months in July, and is currently projected to be about the same for August and September.

As labor turnover has cooled in the past few years, so has wage growth. Economic anxiety has also put pressure on employers to cut budgets, impacting compensation increases and hiring plans. Now, as hiring and quits have stagnated in recent months, workers have faced even fewer opportunities for increased pay: “Slowing nominal wage growth suggests workers don’t have the leverage to bid up their wages. Even with low unemployment, the depressed hires rate means workers aren’t finding new jobs to raise their wages,” Elise Gould, a senior economist at the Economic Policy Institute, wrote on Bluesky.

With wage growth falling behind inflation, workers’ wallets are feeling the pain.

“Slowing wage growth adds insult to injury at a time when inflation remains above the Fed’s 2% target. Higher energy prices are taking larger and larger bites out of paychecks,” Daniel Zhao, chief economist at Glassdoor, wrote on LinkedIn.

Looking ahead. That could change. Job openings have recently risen month over month, signaling employers’ intent to hire, and payroll gains of 162,000 and rising labor force participation in August suggest that workers are taking employers up on these new opportunities. Should workers continue to not see meaningful pay bumps, they might start looking elsewhere: 73% of currently employed job seekers who responded to a recent ZipRecruiter survey cited pay as a top reason for looking for opportunities elsewhere.

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