Will U.S. wages be able to catch up with inflation?

April’s Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics comes out Tuesday, offering details about the state of the labor market. After that, weekly unemployment claims are out Thursday and the all-important May jobs report is released Friday.

That last one will include details on how much workers earned, which is notable because back in April, inflation outpaced wage growth for the first time in three years. The May report could confirm whether that was a blip or the start of a trend.

Of course, everyone wants their pay to keep up with inflation. But Loujaina Abdelwahed, head of economic research at Revelio Labs, said there’s a tough reality in the labor market right now: “Workers aren’t in a very good negotiating position,” she said. There just aren’t a ton of job openings.

“For like two years consistently, the hiring and separation rates are going down and down. So if there aren't that many opportunities for workers, then it's going to be really hard for them to try to negotiate a pay increase,” Abdelwahed said.

That’s a very different situation from the inflation spike of 2021 and 2022, said Betsey Stevenson, a labor economist at the University of Michigan.

Back then, workers could pretty much demand whatever pay they wanted to deal with rising prices.

“The number of job openings swamped the number of people looking to change jobs. Basically anybody who wanted to change jobs could. And  you know, it was really one of the most dynamic periods I've ever seen in the U.S. labor market,” Stevenson said.

All that job switching meant workers came out ahead.

“They saw huge wage gains from those job changes that they made,” she added.

But rapid wage growth was one factor that helped push inflation even higher. And since then, said Ron Hetrick, principal economist at Lightcast, “we have thrown water on this economy to try and cool it down.”

Most critically, the Federal Reserve raised interest rates.

Higher tariffs have also increased economic uncertainty, said Hetrick. “That has made the desire to hire much lower than it would've been in '21 and '22.”

Still, the unemployment rate is at a relatively healthy 4.3%, said Michelle Meyer, chief economist at the Mastercard Economics Institute.

The problem is there’s not much workforce churn. Less movement means fewer opportunities for pay bumps. Meyer said how much that matters will depend on how long the current inflation spike lasts.