Wage Increases Likely to Stay Roughly Steady, WTI Signals
ARLINGTON, Va., Dec. 18, 2012 /PRNewswire-USNewswire/ – Workers in the private sector likely will see the overall rate of wage growth remain at or close to its recent pace in the coming months, according to the revised fourth quarter Wage Trend Indicator(TM) (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index fell to 98.38 (second quarter 1976 = 100) from 98.52 in the third quarter. If confirmed by the final fourth quarter reading, the decline would be the second in a row. Over the past five quarters, the WTI has fluctuated within a narrow range from 98.38 to 98.67.
“The latest WTI is reflecting mixed labor conditions and the uncertainty surrounding political decision-making in Washington, D.C.,” economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA’s WTI database, said. “The potential loss of business if the economy goes over the fiscal cliff may be weighing on employers’ wage and hiring decisions,” Kobe said.
Kobe said she expects little or no change in annual wage gains in the private sector from the 1.8 percent increase over the year ended in the third quarter, as measured by the Department of Labor’s employment cost index (ECI). The WTI does not forecast the magnitude of wage growth, only the direction.
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 increase in the WTI forecasts greater pressure to raise private sector wages, while a sustained decline is predictive of a deceleration in the rate of wage increases.
Reflecting mixed economic conditions, three of the WTI’s seven components made negative contributions to the revised fourth quarter reading, while three factors were positive and one was neutral.
Contributions of Components
Of the WTI’s seven components, the three negative contributors to the preliminary fourth quarter reading were average hourly earnings of production and nonsupervisory workers, as reported by DOL, 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 measured by Bloomberg BNA’s quarterly employment outlook survey. The positive factors were forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia, and the unemployment rate and job losers as a share of the labor force, both from DOL. The neutral component was industrial production, reported by the Federal Reserve Board.
Bloomberg 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 Bloomberg BNA’s WTI home page at http://www.bna.com/wage-trend-indicator-p12884902670/.
The next report of the Wage Trend Indicator(TM) will be released on Wednesday, Jan. 16, 2013 (final fourth quarter)
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Dr. Joel Popkin, who is acknowledged as one of the country’s foremost authorities on the measurement and analysis of wages and prices, developed the WTI for Bloomberg BNA. 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 Bloomberg BNA, is director of price, wage, and productivity analysis at Economic Consulting Services LLC.
To obtain Wage Trend Indicator(TM) reports by e-mail on a regular basis, contact Jerry Walsh, BNA Research & Custom Solutions, 800-372-1033
SOURCE Bloomberg BNA