Employers spent 4% more on wages and benefits last year as workers received larger pay raises in a tight labor market and period of higher inflation, marking an increase not seen since 2001.

The U.S. employment-cost index—a quarterly measure of wages and benefits paid by employers—showed that costs continued to rise at the highest rate in two decades of available records, with a seasonally adjusted increase of 1% in the fourth quarter of 2021 over the prior three months. The fourth quarter gain, compared with a year ago, rose 4% on a non-seasonally adjusted basis, the Labor Department said Friday.