You may have heard a little something about inflation lately. (I won’t insult you by actually linking to an article about inflation). And I’m sure you’ve also heard about how wages are going up. The two are obviously related, but we just wanted to give you some information about these two economic indicators. First, let’s look at inflation. The chart below shows you different inflation levels for a group of peer metros, and, yes, Atlanta’s rate of inflation, year-over-year, is among the highest. At 11.5 percent, it is the highest we’ve seen in Atlanta for years. As you can also see, it is high everywhere, but why so high in Atlanta? One of the most common reasons cited is that since metro Atlanta is still a relatively fast-growing place, we are attracting people from higher cost areas who are bidding up prices, particularly for housing. Here is a recent story from our local NPR on this.
Source: Bureau of Labor Statistics
Another reason for Atlanta’s high inflation, and a by-product of inflation at the same time, is increased wage growth. The chart below shows that since the pandemic started in March 2020, wages in metro Atlanta have increased by 12 percent, which is three times the rate of change in a comparable period prior to the pandemic. Of course, you can also see that prior to the pandemic, wage growth was anemic locally – one of the lowest growth rates among our peer metros, with Houston being the lowest. The search for labor in this extremely tight market has completely changed that dynamic. And yet, while our metro’s inflation rate is relatively high among peers (chart above), our recent wage growth ranks in the low-middle range compared to the other metros (chart below).
Source: Bureau of Labor Statistics
So while wage growth has been impressive both here and in our peer metros, these gains in wages have largely been eroded by gains in inflation. Small businesses, however, are feeling a double-whammy. Not only are they also paying more for stuff, but they are also having to pay more in wages. So maybe the next time you are thinking about what to do one evening, go visit a small business – they need your support!