Improved Wage Gains Likely, BNA Index Signals
ARLINGTON, Va., Dec. 13, 2011 /PRNewswire-USNewswire/ — Annual wage gains in the private sector are on track to improve in the coming months, according to the revised fourth quarter Wage Trend Indicator(TM) (WTI) released today by BNA, a leading publisher of specialized news and information.
The WTI climbed to 98.48 (second quarter 1976 = 100) from 98.36 in the third quarter. If confirmed by the final fourth quarter readings, it would be the sixth consecutive increase in the forward-looking index.
“Right now, both the economy and the labor picture seem to be improving somewhat,” economist Kathryn Kobe, a consultant who maintains and helped develop BNA’s WTI database, said. “There are still a lot of unknowns, however, the big one being the unsettled European debt situation,” Kobe added.
Even with the anticipated pickup in wage growth, annual gains for private sector workers as a whole are not expected to exceed 2.0 percent. In the third quarter, the most recent data available show wages and salaries grew 1.7 percent year-over-year, as measured by the Department of Labor’s employment cost index (ECI).
Reflecting recent labor market conditions, four of the WTI’s seven components made positive contributions to the revised fourth quarter reading, while three factors were negative.
Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the ECI. A sustained decline in the WTI is predictive of a deceleration in the rate of private sector wage increases, while a sustained increase forecasts greater pressure to raise wages.
Contributions of Components
Of the WTI’s seven components, the four positive contributors to the preliminary fourth quarter reading were job losers as a share of the labor force, reported by DOL; forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; and the share of employers planning to hire production and service workers in the coming months and the proportion of employers reporting difficulty in filling professional and technical jobs, both tracked by BNA’s quarterly employment outlook survey. The negative factors were the unemployment rate and average hourly earnings of production and nonsupervisory workers, both reported by DOL, and industrial production, measured by the Federal Reserve Board.
BNA’s Wage Trend Indicator(TM) is designed to serve as a yardstick for employers, analysts, and policymakers to identify turning points in private sector wage patterns. It also provides timely information for business and human resource analysts and executives as they plan for year-to-year changes in compensation costs.
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.
More information on the Wage Trend Indicator is available on BNA’s WTI home page at http://www.wagetrendindicator.com.
The next report of the Wage Trend Indicator(TM) will be released on Wednesday, Jan. 18, 2012 (final fourth quarter)
BNA, a wholly-owned subsidiary of Bloomberg L.P., is a leading source of legal, regulatory, and business information for professionals. BNA analysts produce more than 350 news and information products, including the highly respected Daily Labor Report, U.S. Law Week, and Daily Report for Executives.
Dr. Joel Popkin, who developed the WTI for BNA,is acknowledged as one of the country’s foremost authorities on the measurement and analysis of wages and prices. Formerly an official with the Bureau of Labor Statistics, Dr. Popkin has been an analyst observing and predicting the U.S. economic outlook for 40 years. Kathryn Kobe, who worked with Popkin in designing the indicator for BNA, is director of price, wage, and productivity analysis at Economic Consulting Services LLC.