Wage growth is slowing. Blame the Federal Reserve.

Workers flexed their muscles in 2022, with strikes surging and a labor shortage pressuring businesses to lift wages. That was then.

Now, metrics show that wage growth peaked in the middle of last year and has since slowed. A comprehensive measure of employee pay showed that employer spending on pay and benefits grew only 1% in the last three months of 2022. A report from PayScale also notes that fewer companies are planning to give raises this year and that the average annual pay increase is set to fall from over 5% to between 4% and 5%. Research from regional Federal Reserve banks and Goldman Sachs confirms that wage growth is moderating after spiking last year. 

Such statistics are good news for Federal Reserve Chairman Jerome Powell, who has spearheaded the central bank's policy of sharply driving up interest rates in order to slow the economy enough to curb inflation. But it's bad news for the many workers whose pay is still not keeping up with rising prices.