Little, if Any, Change Expected in Wage Gains, WTI Shows
ARLINGTON, Va., Nov. 19, 2013 /PRNewswire-USNewswire/ — U.S. workers in the private sector likely will experience only incremental changes, if any, in the pace of annual wage gains in the coming months, according to the preliminary fourth-quarter Wage Trend Indicator(TM) (WTI) released today by Bloomberg BNA, a leading publisher of specialized news and information.
The index held steady in the fourth quarter at 98.70 (second quarter 1976 = 100), matching the third-quarter reading. For the past two-and-a-half years, the WTI has fluctuated within a narrow range from 98.47 to 98.75, showing no clear upward or downward trend.
“The labor market is still showing positive momentum, but we’re not drawing down our pool of unemployed workers very quickly,” economist Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA’s WTI database, said. “As a result, the upward pressure on wages is too weak to accelerate the overall rate of wage increases.”
Kobe said she expects the year-over-year gain in private sector wages to stay close to the 1.9 percent reported by the Department of Labor’s employment cost index (ECI) for the 12 months ended in the second quarter of 2013. The WTI forecasts whether the rate of wage growth is accelerating or decelerating, but not the size of pay increases.
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, two of the WTI’s seven components made positive contributions to the preliminary fourth quarter reading, while three factors were negative, and two others were neutral.
Contributions of Components
Among the WTI’s seven components, the two positive contributors to the preliminary fourth-quarter reading were the unemployment rate and average hourly earnings of production and nonsupervisory workers, both reported by DOL. The three negative factors were job losers as a share of the labor force, from DOL; the share of employers planning to hire production and service workers in the coming months, measured by Bloomberg BNA’s quarterly employment outlook survey; and industrial production, reported by the Federal Reserve Board. The neutral components were the share of employers reporting difficulty in filling professional and technical jobs, as shown in Bloomberg BNA’s survey, and forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia.
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 Tuesday, Dec. 17, 2013 (revised 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 Research & Custom Solutions, Bloomberg BNA, 800-372-1033, email@example.com.
CONTACT: Conrad Heibel, Bloomberg BNA, (703) 341-5965; or Kathryn Kobe, ECS, (202) 466-7720
SOURCE Bloomberg BNA