Some of the best news in years on the pay-raise front is being negated by a recent bout of inflation.
Government employment data shows one index of regional wages rising at 4-percent-plus annual pace — no better than the upswing in the local cost-of-living benchmark.
In Los Angeles and Orange counties, private-sector bosses increased weekly earnings by 4.04 percent in the year ended in May to average $1,008. Last time pay was growing faster was November 2014, and don’t forget wages only grew at a 1.7 annual pace in the post-recession days of 2011-15.
In the Inland Empire, earnings rose 4.14 percent in the year ended in May to average $809 — the fifth consecutive month above 4 percent. Last time pay in Riverside and San Bernardino counties was rising this quickly was March 2009 — and pay advanced at a mere 0.3 percent annual rate in 2011-15.
But you can blame a continued uptick in regional housing costs and a sharp reversal in gasoline prices for limiting the buying power of these recent pay hikes.
Pay is up in large part because Southern California can’t easily find workers to hire. May’s unemployment rate for the four-county region was 3.7 percent vs. 4.3 a year ago and a 7.3 percent 5-year average. The number of jobless has been roughly halved: 321,800 in May vs. an average 616,237 in the previous five years.
But fatter paychecks are up against rising costs as inflation in Los Angeles and Orange counties rose at a 4 percent annual rate in June vs. up 2.9 percent nationally.
The change in the two-county region’s Consumer Price Index compares with a 2.8 percent gain for all of 2007, and a most-recent high was 4.5 percent in September 2008. A month earlier, L.A.-O.C.’s inflation rate was 4.1 percent; nationally, it was 2.8 percent. (Note: A new Inland Empire CPi does not offer year-over-year comparisons.)
Here are six local inflation trends from June you should be watching …
1. Overall housing costs in L.A.-O.C. rose 4.9 percent in the past year, according to CPI math. The CPI’s rent index was up 4.7 percent in a year.
2. Gasoline costs 23.9 percent more in the last 12 months. Household energy cost 2.2 percent more.
3. Food costs rose 1.3 percent in a year. Eating out expenses rose 3.8 percent.
4. Medical bills were 2.2 percent higher.
5. Apparel prices were 0.8 lower.
The overdue pay hikes, for those who get them, will certainly be appreciated by the region’s workforce for now. Inflation’s bite, however, could chill any possible jump in consumer enthusiasm that higher salaries could bring.
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