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Workers' Wage Gains Likely to Move Higher

By SHRM Online staff  3/18/2011
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U.S. workers in the private sector are likely to see higher annual wage increases through 2011, according to the revised first-quarter 2011 Wage Trend Indicator (WTI) by BNA, a publisher of specialized news and information.

The rate of annual wage and salary growth for U.S. private-sector workers in the coming months likely will be close to 2 percent, BNA forecasts. Over the 12 months ended in the fourth quarter of 2011, wages grew 1.8 percent, according to the U.S. Department of Labor’s Employment Cost Index, up from a 1.3 percent increase in 2009.

“For the most part, the employment situation has stabilized and is getting a little stronger,” said economist Kathryn Kobe, a consultant who maintains and helped develop the WTI database. “The latest WTI reading shows some upward pressure on wages is expected to follow.”

Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the government's Employment Cost Index, according to BNA. A sustained increase in the WTI forecasts greater pressure to raise wages.

Higher Wage Indicators

Positive contributors to the revised first-quarter 2011 reading were average hourly earnings of production and nonsupervisory workers, the unemployment rate, and job losers as a share of the labor force—all reported by the Department of Labor.

Also indicating upward pressure on wages: industrial production, measured by the Federal Reserve Board, and the share of employers planning to hire production and service workers in the coming months, tracked by BNA’s quarterly employment outlook survey.

The only negative factor was the proportion of employers reporting difficulty in filling professional and technical jobs, as measured in BNA’s survey.

The final WTI component—economic forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia—was neutral.

The WTI is released in 12 monthly reports per year showing the preliminary, revised and final readings for each quarter, based on newly emerging economic data.

Related Articles: 

Salary Increase Budgets Improve in 2011, SHRM Online Compensation Discipline, March 2011

Starting Salaries for 2011 Grads Up 3.5 Percent, SHRM Online Compensation Discipline, March 2011

SHRM Leading Indicators of National Employment (LINE) survey, SHRM Research, March 2011

Largest Merit Increases Since Financial Crisis on Tap, SHRM Online Compensation Discipline, February 2011

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