Macro Roundup

“…"...the climate models that help them project the future have grown a little too alarmist. Many of the world’s leading models are now projecting warming rates that most scientists, including the modelmakers themselves, believe are implausibly fast. In advance of the U.N. report, scientists have scrambled to understand what went wrong and how to turn the models, which in other respects are more powerful and trustworthy than their predecessors, into useful guidance for policymakers. “It’s become clear over the last year or so that we can’t avoid this,” says Gavin Schmidt, director of NASA’s Goddard Institute for Space Studies... So the IPCC team will probably use reality—the actual warming of the world over the past few decades—to constrain the CMIP projections. Several papers have shown how doing so can reduce the uncertainty of the model projections by half, and lower their most extreme projections. For 2100, in a worst-case scenario, that would reduce a raw 5°C of projected warming over 1986-2005 levels to 4.2°C...."

Paul Voosen, "U.N. climate panel confronts implausibly hot forecasts of future warming,"Science, July 27, 2021, https://www.sciencemag.org/news/2021/07/un-climate-panel-confronts-implausibly-hot-forecasts-future-warming

U.N. climate panel confronts implausibly hot forecasts of future warming

Next month, after a yearlong delay because of the pandemic, the U.N. Intergovernmental Panel on Climate Change (IPCC) will begin to release its first major assessment of human-caused global warming since 2013. The report, the first part of which will appear on 9 August, will drop on a world that has starkly changed in 8 years, warming by more than 0.3°C to nearly 1.3°C above preindustrial levels. Weather has grown more severe, seas are measurably higher, and mountain glaciers and polar ice have shrunk sharply. And after years of limited action, many countries, pushed by a concerned public and corporations, seem willing to curb their carbon emissions.

But as climate scientists face this alarming reality, the climate models that help them project the future have grown a little too alarmist. Many of the world’s leading models are now projecting warming rates that most scientists, including the modelmakers themselves, believe are implausibly fast. In advance of the U.N. report, scientists have scrambled to understand what went wrong and how to turn the models, which in other respects are more powerful and trustworthy than their predecessors, into useful guidance for policymakers. “It’s become clear over the last year or so that we can’t avoid this,” says Gavin Schmidt, director of NASA’s Goddard Institute for Space Studies.

Ahead of each major IPCC report, the world’s climate modeling centers run a set of scenarios for the future, calculating how different global emissions paths will alter the climate. These raw results, compiled in the Coupled Model Intercomparison Project (CMIP), then feed directly into the IPCC report. The results live on as other scientists use them to assess the impacts of climate change, insurance companies and financial institutions forecast effects on economies and infrastructure, and economists calculate the true cost of carbon emissions, says Jean-François Lamarque, a lead climate modeler at the National Center for Atmospheric Research (NCAR) and CMIP’s new director. “This is not an ivory tower type of exercise.”

In the past, most models projected a “climate sensitivity”—the warming expected when atmospheric carbon dioxide (CO2) is doubled over preindustrial times—of between 2°C and 4.5°C. Last year, a landmark paper that largely eschewed models and instead used documented factors including ongoing warming trends calculated a likely climate sensitivity of between 2.6°C and 3.9°C. But many of the new models from leading centers showed warming of more than 5°C—uncomfortably outside these bounds.

The models were also out of step with records of past climate. For example, scientists used the new model from NCAR to simulate the coldest point of the most recent ice age, 20,000 years ago. Extensive paleoclimate records suggest Earth cooled nearly 6°C compared with preindustrial times, but the model, fed with low ice age CO2 levels, had temperatures plummeting by nearly twice that much, suggesting it was far too sensitive to the ups and downs of CO2. “That is clearly outside the range of what the geological data indicate,” says Jessica Tierney, a paleoclimatologist at the University of Arizona and a co-author of the work, which appeared in Geophysical Research Letters. “It’s totally out there.”

To find out why, modelers probed the guts of the simulations, focusing on their representation of clouds, long the wild card of climate change. The models can’t simulate clouds directly, so they rely on known physics and observations to estimate cloud properties and behavior. In previous models ice crystals made up more of the low clouds in the midlatitudes of the southern Pacific Ocean and elsewhere than satellite observations seemed to justify. Ice crystals reflect less sunlight than water droplets, so as these clouds heated and the ice melted, they became more reflective and caused cooling. The new models start with more realistic clouds containing more supercooled water, which allows other dynamics driven by warming—the penetration of dry air from above and a subduing of turbulence—to thin the clouds.

But that fix has allowed scientists to spy another bias previously countered by the faulty cooling trend. In both the old and new climate models, the patchy cumulus clouds that form in the tropics thin out in response to warming, allowing in more heat than satellite observations suggest, according to a study by Timothy Myers, a cloud scientist at Lawrence Livermore National Laboratory. “Even though one feature of the climate is now more realistic, another that’s persistently biased has been revealed,” Myers says.

So the IPCC team will probably use reality—the actual warming of the world over the past few decades—to constrain the CMIP projections. Several papers have shown how doing so can reduce the uncertainty of the model projections by half, and lower their most extreme projections. For 2100, in a worst-case scenario, that would reduce a raw 5°C of projected warming over preindustrial levels to 4.2°C. It’s good news for the modelers—but also a clear, and dismaying, sign that global warming has gone on long enough to help chart its own path, says Aurélien Ribes, a climate scientist at France’s National Centre for Meteorological Research. “Observations now provide a clear view for what climate change will be.”

The IPCC report is also likely to present the spatial impacts of different amounts of warming—2°C, 3°C, 4°C—rather than saying how quickly those impacts will be felt. That heat-based technique worked well in an interim IPCC report in 2018, on the impacts of 1.5°C of warming, and would preserve good information from the hot models, even if they suggest these thresholds will come too soon.

The modelers hope to do better next time around. Lamarque says they may test new simulations against recent paleoclimates, not just historical warming, while building them. He also suggests that the development process could benefit from more time, with updates every decade or so rather than the current report interval of every 7 years. And it could be helpful to divide the modeling process in two, with one track focused on scientific experimentation—when a large range of climate sensitivities is helpful—and the other on providing a best estimate to policymakers. “It’s not easy to reconcile these two approaches under a single entity,” Lamarque says.

A cadre of researchers dedicated to the task of translating the models into useful projections could also help, says Angeline Pendergrass, a climate scientist at Cornell University who helped develop one technique for weighting the model results by their accuracy and independence. “It’s an actual job to go between the basic science and the tools I’m messing around with,” she says.

For now, policymakers and other researchers need to avoid putting too much stock in the unconstrained extreme warming the latest models predict, says Claudia Tebaldi, a climate scientist at Pacific Northwest National Laboratory and one of the leaders of CMIP’s climate projections. Getting that message out will be a challenge. “These issues don’t translate very well in practice,” she says. “It’s going to be hard for people looking to make some projection of a water basin in the West to make sense of it.”

Already scientific papers are appearing using CMIP’s unconstrained worst-case scenarios for 2100, adding fire to what are already well-justified fears. But that practice needs to change, Schmidt says. “You end up with numbers for even the near-term that are insanely scary—and wrong.”

"... A study hosted on the preprint server biorxiv.org has found that in animals as diverse as sea urchins and salamanders, females are subject to sexual selection — not as harshly as males are, but enough to make biologists rethink the balance of evolutionary forces shaping species in their accounts of the history of life.The new work turns a spotlight on a lopsidedness in sexual selection research that may have robbed evolutionary studies on about half of all animal species of important context. Scientists have reported scattered evidence of female sexual selection in the past, but more often they haven’t had reason to look for it. That could now be changing...."

Jake Buehler, "Mating Contests Among Females, Long Ignored, May Shape Evolution,"Quanta Magazine, August 2, 2021, https://www.quantamagazine.org/mating-contests-among-females-may-shape-their-evolution-20210802/

Mating Contests Among Females, Long Ignored, May Shape Evolution

As the midday sun hangs over the Scandinavian spruce forest, a swarm of hopeful suitors takes to the air. They are dance flies, and it is time to attract a mate. Zigzagging and twirling, the flies show off their wide, darkened wings and feathery leg scales. They inflate their abdomens like balloons, making themselves look bigger and more appealing to a potential partner.

Suddenly, the swarm electrifies with excitement at the arrival of a new fly, the one they have all been waiting for: a male. It’s time for the preening flock of females to shine.

The flies are flipping the classic drama reenacted across the animal kingdom, in which eager males with dazzling plumage, snarls of antlers or other extraordinary traits compete for a chance to woo a reluctant female. Such competitions between males for the favor of choosy females are enshrined in evolutionary theory as “sexual selection,” with the females’ choices molding the evolution of the males’ instruments of seduction over generations.

Yet it’s becoming clear that this traditional picture of sexual selection is woefully incomplete. Dramatic and obvious reversals of the selection scenario, like that of the dance flies, aren’t often observed in nature, but recent research suggests that throughout the tree of animal life, females jockey for the attention of males far more than was believed. A study hosted on the preprint server biorxiv.org has found that in animals as diverse as sea urchins and salamanders, females are subject to sexual selection — not as harshly as males are, but enough to make biologists rethink the balance of evolutionary forces shaping species in their accounts of the history of life.

The new work turns a spotlight on a lopsidedness in sexual selection research that may have robbed evolutionary studies on about half of all animal species of important context. Scientists have reported scattered evidence of female sexual selection in the past, but more often they haven’t had reason to look for it. That could now be changing.

“We really don’t know very much compared to how much we’ve worked on the male side of things,” said Tommaso Pizzari, an evolutionary biologist at the University of Oxford who was not involved with the new paper. “Sexual selection in females is still relatively unknown. It’s still barely charted territory.”

The concept of sexual selection dates back to Charles Darwin’s first writings on natural selection — briefly mentioned in The Origin of Species, and then covered more extensively in The Descent of Man — where he detailed reproductive preferences between the sexes as potentially driving evolutionary change. Within the framework of conventional natural selection, it makes sense that individuals prefer fit mates. But a key point of sexual selection is that attractiveness to potential mates can be a criterion for selection in itself, independently of how it affects fitness otherwise. Members of one sex can develop traits and behaviors appealing to the other that directly conflict with survival-driven natural selection. Taken to extremes, this can result in the unwieldy, exceptionally elongated display feathers of some male birds, for example, which are only useful in the mating contests that the males stage.

The Victorian View of Females

Yet from its very beginning, the science focused on males as the objects of sexual selection. Darwin saw females as reluctantly picking mates from gaggles of desperate male suitors. He was open to the idea of sexual selection in either direction, but the intensity of the obvious competitions for mates among males fed the idea that sexual selection happened primarily to males; the females were prizes to be won. Females might be setting the terms of the mating competitions, but it was the males who were truly being reshaped through evolution by those choices.

Darwin’s perspective was typical of his time. Theories about sexual selection were born “in the Victorian era, when you had these certain sexual stereotypes about how women should behave,” said Rebecca Boulton, an evolutionary biologist at the University of Exeter in the U.K. “And so, because the field essentially sprung up at that time, it was like, ‘Of course females aren’t mating with multiple males. Of course they’re coy or choosy.”

This viewpoint has contributed to a ubiquitous bias in how sexual selection has been investigated in the last century and a half, the researchers behind the new study argue. They estimate that studies of male-male competition and the phenomenon of female choice are 10 times more common than studies targeting the reverse.

“A lot of people are influenced by the culture that they live in and the things that see,” said Salomé Fromonteil, a graduate student in evolutionary biology now at Uppsala University in Sweden and Ludwig Maximilian University in Munich, and lead author on the study. “It’s influenced by what we read, and what they read is that sexual selection works on males primarily.”

There are undeniable exceptions. Some that have caught researchers’ attention are in species with “sex roles” that are flipped from the conventional arrangement, as in the dance flies. Females of the American tropical wading birds called wattled jacanas (Jacana jacana) keep and defend territories rich in male mates. Among the seahorses and other pipefish, males even take on the job of “pregnancy” by internally incubating their young in a specialized pouch.

Still, scientists studying sexual selection have mostly continued to defer to Darwin’s initial observations in the 19th century. It was generally accepted that males — with their propensity for ornaments and courtship displays — experienced greater sexual selection pressures.

“Of course, that’s not how research should be,” said Tim Janicke, an evolutionary biologist at the Center for Functional and Evolutionary Ecology at the University of Montpellier in France, and senior author of the new study. “If the aim is to describe general patterns in nature, we need data-driven syntheses behind this.”

In 2016, Janicke and his team dove into the published literature measuring the strength of sexual selection acting on a variety of animal species and compared those values between the sexes. That study, published in Science Advances, confirmed that males experience a higher degree of sexual selection than females did.

But as further examples of species likely to be undergoing female sexual selection accumulated, Janicke and his team were struck by a question that their study had not addressed: Just how common is sexual selection among females? They began to wonder whether it was “something rare, or whether it’s actually a general pattern,” Janicke said.

In early 2020, Janicke and Fromonteil were planning to start an empirical study on sexual selection in beetles to probe that question. Then the COVID-19 pandemic and the institutional shutdowns it triggered made laboratory experiments suddenly infeasible. But a meta-analysis of the data from the 2016 study could be done even in “confinement,” as Janicke puts it.

To compare the relative strength of sexual selection in a wide range of species, the scientists needed some way of quantifying that selection intensity. They settled on a method using the Bateman gradient, a measurement named after the 20th-century British geneticist Angus John Bateman.

More Mates, More Sexual Selection

Bateman recognized that while males can produce many sperm at low metabolic cost, females have to make relatively high investments in far fewer eggs. In the 1940s, his research on fruit flies led Bateman to propose that this fundamental divergence in gamete investment drives apart the mating strategies of males and females: To maximize their reproductive capacity, males might routinely seek out and compete for many mating partners, while females might instead evolve to be choosy.

Other researchers built on this idea, developing the Bateman gradient to describe the fitness benefits of having multiple mating partners. The measurement is the slope of the line comparing reproductive output to the number of mating events — in effect, it shows how sharply an organism’s number of offspring increases with more mating. The steeper the positive slope, the greater the fitness benefit of more mating events, which in most species means having more mates. (By mating with multiple males rather than just one, a female can sometimes hedge her bets about which mate will produce the fittest offspring.)

“If there’s positive selection on having more mating partners, this should translate into competition for mating partners,” said Janicke. “And this competition is basically the essence of Darwinian sexual selection.” For this reason, Bateman gradients are a common way of indirectly quantifying sexual selection.

From a sweep of the scientific literature, the team compiled 111 Bateman gradients calculated for females in 72 animal species, ranging from beetles to mollusks to mammals. The gradients varied widely, but they clustered in the positive range. The team also found, as expected, that species with “polyandrous” females who had access to many partners simultaneously had Bateman gradient values considerably greater than those of species with “monandrous” females who mostly mated with one male at a time.

The findings suggest that — as has long been presumed for males — females get a fitness boost from multiple matings, and that opens the door to widespread sexual selection. The positive female Bateman gradients don’t appear to be as large as those for males, Janicke said, but their pervasiveness hints at the importance of sexual selection in the evolution of females, even in species seen as having “typical” sex roles.

While acknowledging that the Bateman gradient is a “powerful measurement to quantify sexual selection,” Janicke noted that it only reflects selection directly related to the act of mating. In species that spawn profusions of eggs, such as many fish as well as corals and other marine invertebrates, there are opportunities for selection after mating, too, with eggs competing for access to sperm, or sperm having choice capabilities that affect fertilization. Janicke’s study did not extend to this kind of post-mating sexual selection. It’s therefore possible that even more female sexual selection occurs than the new study suggests, but future work will need to test that possibility.

For Pizzari, the study “confirms something that I think we have been, as a community, beginning to realize for quite some time now: that sexual selection is potentially quite important in females across a number of species, as well as for males.”

Alternative explanations, however, do still need to be tested. Some of the gradients that Janicke’s team identified may be rooted in certain females’ inherent attractiveness to males due to their reproductive output. “It may well be that the females that have more eggs to produce … happen to attract a lot more males simply because they have a higher reproductive value,” Pizzari said. If so, it wouldn’t be that more matings were more beneficial to females, “it’s that males are more interested in mating with fecund females.”

If that is the case, however, then Jonathan Henshaw, an evolutionary biologist at the University of Freiburg in Germany who was also not involved with the study, thinks that empirical tests could help isolate this effect. “If you really wanted to know what the causal effect of mating on reproductive success is, the best thing would be to do as others have done and actually manipulate the number of mates that are available to individual females,” he said.

Experiments could also help reveal whether sexual selection is playing out in these females in the wild, and how selection might be influencing the traits that females use to compete with one another. “The potential for … different mechanisms of sexual selection is there,” Boulton said. “Whether that’s what’s actually happening is something that is a little bit harder to tease apart.”

Confrontations and Decorations

Now that scientists are becoming more aware that they should look for evidence of female sexual selection, the traits and behaviors it cultivates in females may become more obvious. Black grouse (Tetrao tetrix) were considered a classic example of male sexual selection: The males have distinct, vivid coloration, and they compete for females in elaborate courtship display arenas called leks. But recent evidence suggests that while the males are putting on their show, the females are also aggressively jockeying for their choices. Female Mediterranean fruit flies (Ceratitis capitata) take a very similar approach. Certain dung beetle females have even evolved horns that may be used for battling with other females in contests over access to males.

But such intrasexual combat isn’t likely to develop in most females, Boulton argues. Fighting has an inherent risk of bodily harm — something that males can more easily afford since they just need to survive until copulation. Female reproductive success takes time: They have to live long enough to lay all their eggs, and sometimes to care for the newborns. “Whereas the males, they’ve kind of got less to lose,” she said.

The ornaments and competitions that females use to gain mates may sometimes have been overlooked because they are more subtle and look like pared-down versions of what males sport. For instance, female Malurus fairy wrens are undergoing sexual selection on their bill and plumage coloration independently of similar pressures on the males. Both male and female chickens (Gallus gallus) have fleshy ornamental combs. Hens prefer roosters with bigger combs as mates, but the roosters give more sperm to hens with bigger combs, too.

Such ornamentation traits in females are sometimes viewed as byproducts of sexual selection on a female’s male ancestors — “leaky sexual dimorphism,” Pizzari said. But he argues that males may pay attention to these ornaments, which could give them evolutionary significance in the females. “They might have been the target of adaptive selection in their own right.”

Another trait that males commonly seem to key in on is female body size, Boulton said. Males tend to prefer bigger and heavier females. This preference might be rooted in the value of size as a signal of the females’ overall health and reproductive potential, but it could also be a platform for female competitiveness.

No matter how female animals respond to sexual selection in nature, the new findings help reiterate how much of it went largely undetected by science for many decades. Part of the rigid stereotyping around research into sexual selection was likely informed by culture and patriarchal attitudes.

The stereotype of male-centered sexual selection may also have persisted so stubbornly “because there’s a kernel of truth in it — that in the vast majority of species, males do gain more from additional matings than females do,” Henshaw said. The pitfall is that “it’s sort of easy to go from that truth to an opposite stereotype which says that ‘generally speaking, females don’t gain anything from extra matings.’ But then you’ve kind of gone too far.”

Extreme physical differences between the sexes in some species may also have blunted the search for the more hidden but widespread sexual selection among females. “If you have a species that shows this striking sexual dimorphism, you might not start to study intrasexual selection among females,” Janicke said, because male selection would seem like the default explanation.

And yet, despite the weight of human assumptions and sensory biases, a pattern is beginning to rise to the surface: Female sexual selection is the norm. “Generally speaking, sexual selection operates on females,” Fromonteil said.

Janicke plans to continuously update the database with Bateman gradients as they are published. “This database will grow and grow, and we’ll see what other kinds of questions we can still address with this. But I am very confident that this pattern on sexual selection for females will not change,” he said.

Greg Obenshain and Eldar Safarov report on a Andrei Shleifer paper (attached) we previously highlighted that argues financial crisis are relatively predictable, "...The authors define periods when three-year debt growth has been in the top 20% of historical increases and three-year asset price growth has been in the top third of historical increases as the “Red Zone,” shown in the upper right-hand corner of the figure below... The probability of experiencing a financial crisis within one year of entering the Red Zone is over 13%, compared to a 4% probability in the entire dataset. Remarkably, the probability of entering a financial crisis within three years of entering the Business Red Zone is 45% and an astounding 69% in the rare instances when both the household and business Red Zones are breached. The authors note that crises do not immediately follow high debt and asset price growth, suggesting they take time to develop.... And most interestingly, we have just entered a Red Zone as of the end of 2020.This is driven by the rise of debt-to-GDP and the equity market rally. Even if debt-to-GDP is calculated using the pre-COVID GDP level, this result holds. So, if crises are by-products of credit and asset price growth cycles, as the authors’ evidence strongly suggests, then the US may have just entered the danger zone. This does not mean that we need to worry about the sky falling just yet. The authors show clearly that crises take time to develop, and only materialize 36% of the time after a Red Zone has been entered...."

Are Financial Crises Predictable?

The consensus wisdom among academics and practitioners alike is that crises are inherently unpredictable. But Harvard’s famed behavioral economics group has recently produced a new paper suggesting the consensus wisdom on predicting crises might be wrong—at least on a time horizon of three years or longer. Instead, they argue that rapid expansions of credit can drive asset price booms, which are followed by credit busts.

Building off earlier academic research, the authors combine data from 42 countries between 1950 and 2016 to study financial crises in the context of business and household credit growth as well as equity and home price growth. They define crises as declines in bank equities by greater than 30% or banking panics, which capture events such as the Great Recession (2007) and the Savings and Loan Crisis (1990), but not the bust of the dot-com bubble. In line with the theories of Hyman Minsky and Charles Kindleberger, the authors find that financial crises tend to follow periods that feature both elevated debt and asset price growth. The authors define periods when three-year debt growth has been in the top 20% of historical increases and three-year asset price growth has been in the top third of historical increases as the “Red Zone,” shown in the upper right-hand corner of the figure below.

The table below shows the probability of entering a financial crisis once the Red Zone has been breached, broken down by the type of Red Zone event: business, household or both.

As a leading indicator, the Red Zone would appear to be effective. 64% of crises were preceded by either the business or household Red Zone warning within the prior three years. When the authors expand their three-year debt growth to include the top 40% of historical increases and the three-year price growth to be in the top two-thirds of historical increases, the Yellow Zone precedes 82% of crises within the prior three years. But like most leading indicators, their presence does not necessarily result in the event. Red Zones and Yellow Zones were followed by crises only 36% and 20% of the time. To give a sense of what this data looks like, we show the Red and Yellow Zone indicators for the US housing sector along with the real housing price index.

Ideally, we’d show the same chart for US businesses debt and asset price growth. However, there were no business Red Zones in the United States in the authors’ dataset. But while the authors needed to study 42 countries across 60 years so that they could get statistically significant results, we are not similarly constrained. We can use their insights to see what happens if we use US data alone. Specifically, rather than global cut-off values for Red and Yellow Zones, we can use only the US data to define the Yellow and Red Zones. The results are shown below.

Credit and asset booms are what predict busts. In part, the authors argue, because investors tend to extrapolate these booms into the future, taking more risks than they should. Investors feel an inevitable desire to “reach for yield” in low-yielding environments, spurring credit growth that drives asset growth until the inevitable reckoning when some portion of the assets and some portion of the debt go bad.

Jordyn Holman, Leslie Patton, and Peyton Forte, "Corporate America Is Ponying Up for Workers Suddenly in Demand," Bloomberg, August 9, 2021,
https://www.bloomberg.com/news/articles/2021-08-09/corporate-america-is-ponying-up-for-workers-suddenly-in-demand

Corporate America Is Ponying Up for Workers Suddenly in Demand

For the first time in decades, the American worker is finally in command when it comes time to talk money.

There are tell-tale signs everywhere that this is so.

Like the way some employers -- such as Kroger Co., Chipotle Mexican Grill Inc. and Under Armour Inc. -- are frantically pushing up hourly wages to try to retain employees. Or the way others -- like Starbucks Corp. and Drury Hotels -- are dangling hiring bonuses to entry-level applicants. Or the way CVS Health Corp. is no longer requiring job seekers to have high-school diplomas. Or the way Dan Sacco, the owner of Your Pie restaurants in Iowa, is instructing his general managers to poach workers from rivals with offers of better hours and higher pay.

“Everything is fair game now,” Sacco says.

It is unclear how long all of this will last in the wild and disjointed economic recovery that’s followed last year’s pandemic collapse. But one thing is certain: Workers are scoring the fattest pay hikes since the early 1980s. Wages for the leisure and hospitality industry have surged at an annualized pace of 6.6% over the past two years. And data released Friday showed that payrolls rose nationally at the fastest pace in almost a year, a sign of how desperate employers are to fill jobs.

“If you’re not able to get staff to cover, it leaves you really crunched and that’s what we’re seeing at the moment,” said Neil Saunders, a managing director at market research firm GlobalData who covers retailers and grocers. “Wages have gone up and have been going up.”

Inflation is another complicating factor that’s limiting the benefits of pay raises. Consumer prices surged 5.4% in June from a year ago, the fastest pace since 2008. According to a Peterson Institute study, inflation-adjusted compensation for all civilian workers is now lower than it was in December 2019.

But if policy makers can tamp down on the price increases, workers should do well. Data from the Labor Department show median wage growth was 4.8% in July on a 24-month annualized basis, up from a 3.3% pace in January 2020. Service workers saw gains almost two percentage points higher than the average for all employees last month.

The subject came up at a recent meeting with Treasury Secretary Janet Yellen in Atlanta, where she gathered senior leaders from companies including Delta Air Lines Inc. and Coca-Cola Co. to talk about inflation and the economy. During private discussions, some executives bemoaned the fact they still can’t fill open positions even after wages were increased, according to a person familiar with the conversation. The consensus among employers was that higher pay is here to stay.

A Starbucks location in Manhattan is offering a $200 signing bonus to anyone who joins by the end of the month. Kroger said by the end of the year the average hourly rate at its grocery stores will be about $21, when comprehensive benefits are considered, up from $15.50 in March. And recruiting efforts have spread far and wide, with Church’s Chicken passing out coupon books that say “Always Hiring.”

At Amazon, warehouse workers and other hourly employees got raises this year as the retailer seeks to retain talent. Amazon is spending heavily on signing incentives, Chief Financial Officer Brian Olsavsky said during a call with analysts last month.

“It’s a very competitive labor market,” Olsavsky said.

Darius Adamczyk, the CEO of Honeywell International Inc., is doling out wage hikes of more than 10% for some factory workers. He’s trying to raise prices to offset steeper costs for labor, materials and services. Those higher wages will probably stick, since companies rarely reverse increased pay rates.

“If labor costs go up permanently, then we’re going to have to figure out how we sustain at least some level of that pricing power,” Adamczyk said in an interview.

In Iowa, Sacco says his Your Pie pizzerias have been able to hire a few more people after offering higher wages. He pays about $10.50 an hour, and workers often earn another $2 an hour in tips. His other recruiting pitch is a better schedule. He’s poached a few workers from nearby rivals that are open until 1 a.m., later than his restaurants’ 9:30 p.m. closing time.

There are some businesses who say the tide is turning in their favor. McDonald’s Corp. CEO Chris Kempczinski said after raising wages about 5% in its U.S. locations, applications have increased significantly, particularly as the federal stimulus has ended in parts of the country. Critics have argued that workers have stayed on the sidelines because of cash transfers and unemployment benefits.

Noodles & Co., a fast-casual restaurant chain, saw a 70% jump in applications in June compared with April.

“We’re starting to see the light at the end of the tunnel in terms of the whole staffing shortage,” CEO Dave Boennighausen said.

Labor Secretary Marty Walsh says the U.S. job market is healthy as people resume traveling and eating out at restaurants, though he acknowledged that delta variant poses a risk. Vaccinations and wage growth are encouraging people to return to the workforce, though salaries may have to go higher, he said in an interview Aug. 6 after the payrolls report.

“Wage growth is good. It’s good for the American worker,” Walsh told Bloomberg Television. “In some sectors, we’re definitely going to need to see higher wage growth for people to come back to work. But I think where we’re headed right now, all signs are incrementally going in a good, positive direction.”