Inflation is stinging U.S. workers harder

Wall Street Journal

Consumer prices are rising at their fastest pace in more than a decade in both the U.S. and the euro zone. But it's affecting workers on the two sides of the Atlantic in very different ways.

Unions are more powerful in the 15-nation euro zone than in the U.S., and many laws and practices there are more worker-friendly. That's part of the reason why many European workers are keeping up with inflation better than their U.S. counterparts.

Wages and salaries in the euro zone were 3.4 percent higher in the first quarter than in the year-earlier period, matching the first-quarter annual inflation rate. It was the steepest wage increase in the 15 countries that share the currency in nearly six years. Inflation in the euro zone hit 4 percent in July, and many economists expect wages to keep rising this year.

In the U.S., where unions are weaker and wages aren't often indexed to inflation, workers fell behind. Consumer prices were 4.1 percent higher in the first quarter than in the year-earlier period, but workers' wages and benefits increased 3.3 percent over the same period. Inflation has risen further since the first quarter, hitting 5.6 percent in July, while compensation growth has slowed......