Easing labor shortages, softening inflation, and slower economic growth will help tame wage increases in the coming years.

In the United States, wage growth will continue to slow in 2024, averaging 4.0% growth in 2024 and softening to 3.4% in 2025. Unemployment, meanwhile, is gradually increasing, reaching 4.1% in June, compared with 3.7% the previous year. Data on labor shortages shows improvement as well, although this is primarily due to weakened demand rather than an improved labor supply.

Since the collective bargaining agreement between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance expired on September 30 and the ILA was looking for more than a 70% wage increase over a six-year contract, ILA started its strike on October 1, which closed down major ports on the East and Gulf Coasts. The strike ended on October 3 after the union accepted the USMX offer of a 62% wage increase over the next six years, and agreed to extend the expired contract until the January 15 deadline to resolve the remaining issues. Looking forward to 2025, workers in construction will continue to see the strongest wage growth, supported by the CHIPS and Science Act and the Inflation Reduction Act, which have boosted investment in manufacturing structures. Union wages will grow 5.2% in 2024.