BNA Index Forecasts Modest Pickup in Private Sector Wage Growth
ARLINGTON, Va., April 13, 2011 /PRNewswire-USNewswire/ — The pace of wage growth for private sector workers is expected to improve modestly in the coming months, according to the final first quarter Wage Trend Indicator(TM) (WTI) released today by BNA, a leading publisher of specialized news and information.
In the opening months of 2011, the WTI increased for the third consecutive quarter to 98.01 (second quarter 1976 = 100), up from 97.42 in the fourth quarter of 2010.
“Overall, the signs are positive for the turnaround in the labor market to continue,” economist Kathryn Kobe, a consultant who maintains and helped develop BNA’s WTI database, said. Even so, Kobe said she expects only “mild upward pressure” on wages in the coming months, unless the unemployment rate drops much faster than anticipated.
Annual gains in wages and salaries overall in the private sector likely will improve to around 2.0 percent in the coming months, up from a 1.8 percent gain in 2010, as measured by the Department of Labor’s employment cost index (ECI).
Reflecting an improved labor market, five of the WTI’s seven components made positive contributions to the final first quarter reading, while one factor was negative and one other 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 first quarter 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 DOL; 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.
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 Tuesday, May 17, 2011 (preliminary second 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.