Pay and benefits for America’s workers grew in the final three months of last year at the slowest pace in two and a half years, a trend that could affect the Federal Reserve's decision about when to begin cutting interest rates, the Associated Press reported. Compensation as measured by the government's Employment Cost Index rose 0.9% in the October-December quarter, down from a 1.1% increase in the previous quarter, the Labor Department said Wednesday. Compared with the same quarter a year earlier, compensation growth slowed to 4.2% from 4.3%. Since the pandemic, wages on average have grown at a historically rapid pace, before adjusting for inflation. Many companies have had to offer much higher pay to attract and keep workers. Yet hiring has moderated in recent months, to levels closer those that prevailed before the pandemic. Growth in pay and benefits, as measured by the ECI, peaked at 5.1% in the fall of 2022. Yet at that time, inflation was rising much faster than it is now, thereby reducing Americans’ overall buying power.
