BNA Index Signals Higher Wage Increases

January 13, 2011

ARLINGTON, Va., Jan. 13, 2011 /PRNewswire-USNewswire/ — Year-over-year wage gains for private sector workers are likely to improve in the coming months, according to the final fourth quarter Wage Trend Indicator(TM) (WTI) released today by BNA, a leading publisher of specialized news and information.

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The WTI rose to 97.29 (second quarter 1976 = 100) from 97.00 in the third quarter, marking the second straight gain. Previously, the forward-looking index fell steadily for more than two years.

“The labor market continues to improve incrementally, bit by bit,” said economist Kathryn Kobe, a consultant who maintains and helped develop BNA’s WTI database. “However, there is a large pool of unemployed workers, and overall hiring demand remains far below pre-recession levels,” Kobe said.

As a result, annual wage and salary growth in the private sector in the coming months is expected to remain below 2.0 percent, Kobe said. Over the 12 months ended in the third quarter, wages grew 1.6 percent, according to the Department of Labor’s employment cost index (ECI), up from a record low 1.4 percent in the comparable period of 2009.

Reflecting improving labor market conditions, five of the WTI’s seven components made positive contributions to the final fourth quarter reading, while one component was negative, and one was neutral.

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 five positive contributors to the final fourth quarter reading were average hourly earnings of production and nonsupervisory workers and job losers as a share of the labor force, both reported by DOL; industrial production, measured by the Federal Reserve Board; and the proportion of employers reporting difficulty in filling professional and technical jobs and the share of employers planning to hire production and service workers in the coming months, both tracked by BNA’s quarterly employment survey. The negative contributor was the unemployment rate, from DOL. The remaining component — economic forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia — was neutral.

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 Thursday, Feb. 17, 2011 (preliminary first quarter)

BNA is a leading publisher of print and electronic news, analysis, and reference products, providing intensive coverage of legal and regulatory developments for professionals in business and government. BNA produces more than 200 news and information services, including the highly respected Daily Labor Report 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.

To obtain Wage Trend Indicator(TM) reports by e-mail on a regular basis, contact Jerry Walsh, BNA PLUS, 800-372-1033.


Source: newswire

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