The U.S. has over 10 million open jobs that companies are looking to fill, and many of those businesses are hoping to entice workers with higher wages. It’s adding up.

The U.S. employment-cost index released Friday revealed that employers’ compensation costs for all civilian workers, including worker wages and benefits, jumped 4% year-over-year during the final quarter of 2021. That’s the biggest increase in over 20 years. 

Compensation costs for private industry during the fourth quarter trended even higher—up 4.5% over the previous 12 months. 

These are just the averages. Some companies, including Wall Street firms, are already saying that increased compensation costs are cutting into their bottom lines. 

“We’re going to continue to see pretty strong wage growth this year. It’s not going away,” Erik Lundh, principal economist at the Conference Board, told Fortune. He said he expects wages and salaries to continue to trend upwards throughout at least January and February 2022. 

Worker pay was already on the rise before the pandemic, as companies struggled to hire enough workers—particularly in blue-collar industries. Many retailers and fast food chains, for example, were raising their minimum wages. But when the pandemic hit and consumer demand skyrocketed, more employers piled on the wage hikes, extra pandemic pay and sign-on bonuses. 

Yet whether wage growth continues depends on how the pandemic shapes up. With the number of new COVID-19 cases under 100,000 as of Sunday—down from the record of nearly 1.4 million earlier in January—Lundh says the U.S. is likely exiting a “pretty rough patch.”

If caseloads continue to slow, that could lure those with health concerns back into the job market and help boost the number of workers taking jobs. And the recent market volatility may also help keep workers at their desks or even push some who have retired to get at least a part-time gig to shore up their investment portfolio in light of the recent dips. That could help to staunch further dramatic wage hikes. 

But while wages have risen sharply, Lundh and other economists believe that labor costs haven’t yet played a major role in the red-hot inflation the U.S. has experienced in 2021.

“I don’t think it has been the primary driver of inflation in 2021. A lot of people are pointing at wages and saying, ‘Look, it’s driving inflation.’ There’s a lot of other things that were happening last year that were responsible,” Lundh says, adding that supply chain bottlenecks and continued worker absences due to COVID have restricted the supply of goods. 

Typically, when wages rise, it can lead to an increase in prices because goods are more expensive to produce and workers have more disposable income and therefore demand also rises. 

“I don’t think we’re in a wage-price spiral point yet—although it’s not very far off,” Lundh says, adding that he’s a bit concerned that core inflation, which doesn’t include the more volatile food and energy categories, has been trending higher for the past three months. 

If that continues, inflation could become more entrenched in the U.S. economy as opposed to just reflecting shorter-term, pandemic-related issues. 

In the meantime, economists are betting on the Federal Reserve to get aggressive. Chair Jerome Powell has said the Fed “is of a mind to raise the federal funds rate at the March meeting, assuming that conditions are appropriate for doing so.” 

By raising rates, the Fed hopes to cool consumer demand and slow inflation. Last year, the Fed indicated the U.S. could be in for three smaller interest rate hikes in 2022, but Lundh says he expects it will be closer to four or five.