Workers who are staying in their jobs are getting their biggest pay raises in decades, putting pressure on inflation, according to a report from the Wall Street Journal.

According to the Federal Reserve Bank of Atlanta, wages for employees who stayed at their jobs were up 5.5% in November from a year earlier.

That was up from 3.7% annual growth in January 2022, marking the highest increase in 25 years of recordkeeping, the report said.

According to the Journal, workers who changed companies, job duties or occupations saw even greater wage gains of 7.7% in November from the prior year.

“If I can see that the Burger King down the street is offering $22 an hour, and I’m making $20 an hour at the Dunkin’ Donuts that I work at, then I know very clearly what my opportunity cost is,”  Layla O’Kane, senior economist at Lightcast, told the Journal. “Employers are reacting to that and saying, ‘Well, we’re going to increase wages internally because we don’t want to lose the staff that we’ve already trained.’”

The prospect that employees might leave for more money is a main reason companies are raising wages for existing employees, but faster wage growth is contributing to historically high inflation as some companies pass along price increases to offset their hefty labor costs.

Although inflation has cooled slightly in recent months, prices spiked at their fastest pace in four decades last year. Federal Reserve officials have said they’re monitoring wage gains as they mull future interest rate increases to slow the economy and bring down inflation. Prices rose 5.5% in November from a year earlier, down from a revised 6.1% increase in October.

Even though many workers are raking in more money, they aren’t feeling pay gains. According to the Labor Department, wages for all private-sector workers declined by 1.9% over the 12 months that ended in November, after accounting for annual inflation of 7.1%.

There are also signs that wage gains are starting to cool as the labor market loosens a bit. Average hourly earnings increased 5.1% in November from a year earlier, slowing from a March peak of 5.6%. Analysts told the Journal that wage growth could continue to slow in coming months.

In industries with high demand for workers, “companies are prepared for wage growth to match inflation,” said Paul McDonald, senior executive director at Robert Half, a professional staffing company. “As inflation comes down, it will be more in line with what wage growth has been.”

The consumer price index, a measurement of what consumers pay for goods and services, rose 7.1% in November — its slowest pace in 2022 — down from 7.7% in October.

In competitive sectors, wage pressures will likely continue, however. According to a Robert Half survey released in September, more than half of professionals feel underpaid, and four in 10 workers would leave their jobs for a 10% raise elsewhere.

Broadly speaking, pay is increasing for job changers and job stayers because companies can’t find enough help. The Labor Department said job openings — at 10.3 million in October — far exceeded the 6.1 million unemployed Americans looking for work that month.

As a result, companies are budgeting more merit-pay increases in 2023 than they have in 15 years in order to incentivize employees, according to a Mercer survey of more than 1,000 companies. 

Daniel Powers, a recent college graduate, earned a 10% year-end raise at a management consulting firm in Chicago, after starting out with a six-figure salary when he was hired in September, according to the Journal.

“They understand the realities of the market — there’s no false illusion of ‘We’re family here,’” Powers said of his company’s management.