😭 While the stock market continues its meltdown — this has been the S&P 500's worst start to a year since 1962, according to Goldman Sachs — we're taking a break from the carnage of the equities markets to look at the stark realities of the job market.

  • And as Emily points out, that remarkable moment of wage growth that began during the COVID crisis has now petered out, leaving most Americans about where they were before the pandemic upended, well, everything.

Today's newsletter, edited by Kate Marino is 880 words, 3.5 minutes.

1 big thing: Wanted ... raises that beat inflation

Illustration: Victoria Ellis/Axios

You might have heard that nowadays workers want flexibility or jobs with a sense of purpose. But with inflation on the rise, something far more basic is getting attention: cost of living wage adjustments, or raises that keep up with actual inflation, Emily writes.

Why it matters: Though wages have risen substantially over the past year, on average they're not keeping pace with inflation. Whether that's a good or a bad thing kind of depends on where you sit in the worker food chain, and on your economic outlook.

  • Unions — and other workers — are increasingly looking for cost of living raises and protections.
  • Once common in contracts back in the inflation-soaked 1970s, these provisions lost favor as labor's power diminished and inflation ceased to be as much of a concern while rising health care costs gained attention, says Todd Vachon, a professor of labor studies at Rutgers University.

Now: "There is increased interest in getting COLA provisions back in many contracts," Ray Curry, the president of the United Auto Workers, which represents nearly 400,000 workers, tells Axios.

  • Case in point: At the end of 2021, John Deere UAW members signed a six-year agreement that locked in such adjustments.

State of play: Inflation over the last year is 8.6%, according to the Consumer Price Index. Wage growth was 6.1%, according to the Atlanta Fed's wage tracker — a closely followed data source. For workers with a college degree, it was 5.4%.

  • Meanwhile, real (inflation-adjusted) average hourly earnings are back where they were at the start of the pandemic (check out the chart below).

Zoom out: A few months ago, economists and policymakers were freaking out over the possibility of a wage-price spiral, in which rising wages drive prices higher, a vicious cycle that sends inflation out of control.

  • That hasn't happened, in part because of the diminished power of unions — and also, partly, because of the fast-changing nature of the economy. Just a month ago, economists were (wrongly) saying inflation peaked, notes Nela Richardson, chief economist at payroll firm ADP.
  • "Wage growth is responding to what’s already happened to inflation and productivity. This isn’t the beginning of a wage-price spiral, " Jean Boivin, head of BlackRock Investment Institute, tells Axios.

And some nonunion companies are giving COLAs a whirl. Back in February, all nonexecutive employees at Crunchbase learned they'd get a 7% raise, around the inflation rate at the time, purely to keep pace with price increases.

  • This was outside of their regular review and promotion cycle, says Matt Schulman, a communications manager at the company. He got another raise soon after. "It was pretty awesome."

The bottom line: "Wage growth is an element of inflation, but it's not one of the key drivers right now," says ADP's Richardson.

2. Charted: Pay barely kept up with inflation

Data: St. Louis Fed; Note: Values in May 2022 dollars; Chart: Axios Visuals

Here's some perspective on the tight labor market: Once you adjust wage data for inflation, workers in the U.S. don't seem to have made much progress since the before-times, Emily writes.

American workers earned $31.95 on average, in real terms in May 2022 — basically, the same as they were making right before COVID (h/t Axios chief financial correspondent Felix Salmon for doing the calculations).

Of note: The spike in earnings you see in the chart happened in April 2020 when millions of mostly lower-paid workers lost their jobs, changing the overall composition of the workforce. Those who held on to employment were higher-earners.

3. Catch up quick

🛢 Biden warns Big Oil over gas output. (Axios)

💶 ECB holds emergency meeting to discuss market turmoil. (FT)

🏠 U.S. home equity hits record $27.8 trillion. (WSJ)

4. 🌪 Tremendous T-note turnabout

Data: FactSet; Chart: Axios Visuals

Yields on U.S. government bonds — known as Treasuries — rocketed in recent days, as Friday's inflation report convinced many that a combination of persistently high inflation and aggressive Federal Reserve interest hikes, is on the way, Matt writes.

Driving the news: The yield on the 10-year Treasury note surged to nearly 3.50% in recent days, a level not seen since 2011.

Why it matters: The yield on the benchmark 10-year note is the most important number in financial markets, and arguably the world.

  • It's the foundation that investors worldwide use to build the models that determine the interest rates that borrowers — from home buyers locking in a mortgage to Fortune 500 companies placing multibillion-dollar bond deals — should pay.
  • That means it's a quick-and-dirty way to assess the cost of borrowing in an economy.

When Treasury yields rise, almost everybody else pays more — sometimes a lot more.

The bottom line: Add this to the growing list of ominous signs for the U.S. economy ... The Fed's trying to slow things down, without tipping the economy into an outright recession — but that's looking like a tougher path to walk lately.

5. 💬 Quoted (flashback edition): Samuelson's timeless reminder

"Wall Street indexes predicted nine out of the last five recessions! And its mistakes were beauties."
Nobel laureate and economist Paul Samuelson, in a September 1966 column in Newsweek.

Why it matters: It's a reminder that the stock market's moves are often at odds with the underlying economic fundamentals.

  • Yes, but: As we've said before, the stock market isn't the only indicator flashing warnings.

🎧 1 thing Matt loves: I've become dangerously dependent on podcasts, and can no longer imagine doing even the most basic of chores — dishes, garbage, yard work — without being audibly engaged.

This year I've been binging on "The Rest Is History," an admittedly anglophile romp through the often awful, and sometimes remarkably funny, range of, well, human history. The recent episode about the life of the poet, politician, and godfather of fascism, Gabriele D'Annunzio, is as good a place as any to start.