Private sector wages in the U.S. will continue to grow at or near record low rates, according to the second quarter 2010 Wage Trend Indicator (WTI) report by BNA, a publisher of specialized news and information.
“I think that, basically, we’re seeing a labor market that has hit bottom but hasn’t turned around yet,” economist Kathryn Kobe, a consultant who helped develop and maintains BNA’s WTI database, said. “That’s why we’re not likely to see wages pick up anytime soon.”
Year-over-year wage and salary increases for private sector employees in the summer of 2010 are expected to remain at or below 1.5 percent, the rate for the 12 months that ended in March 2010 as measured by the U.S. Department of Labor’s employment cost index (ECI). Although wage growth could slow further—to the record low of 1.4 percent in 2009 or less—it probably won’t fall below 1 percent, Kobe said.
Contributions of Components
Reflecting recent labor market conditions, four of the WTI’s seven components made negative contributions to the revised second quarter 2010 reading, outweighing three positive components.
The four negative contributors to the revised second quarter reading were:
• The U.S. unemployment rate (reported by the Department of Labor).
• The average hourly earnings of production and nonsupervisory workers (Department of Labor).
• Industrial production (Federal Reserve Board).
• The proportion of employers reporting difficulty in filling professional and technical jobs (BNA’s quarterly Employment Outlook Survey).
The three positive components were:
• Job losers as a share of the labor force (Department of Labor).
• Economic forecasters’ expectations for the rate of inflation (Federal Reserve Bank of Philadelphia).
• The share of employers planning to hire production and service workers in the coming months (BNA’s employment survey).
Stephen Miller is an online editor/manager for SHRM.
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