Workers Likely to See Higher Pay Increases, BNA Index Signals
ARLINGTON, Va., July 14, 2011 /PRNewswire-USNewswire/ — Private sector workers likely will see higher annual pay increases later this year, according to the final second quarter Wage Trend Indicator(TM) (WTI) released today by BNA, a leading publisher of specialized news and information.
The WTI rose to 98.21 (second quarter 1976 = 100), up from 98.01 in the first quarter. The index has climbed steadily over the past year.
“Labor market conditions in the private sector are still improving, although very slowly,” economist Kathryn Kobe, a consultant who maintains and helped develop BNA’s WTI database, said. “At the same time, there is a lot of uncertainty about the forward momentum in the economy, and the WTI’s forecast depends on the labor market continuing to improve,” Kobe said.
The overall rate of annual pay increases for wage and salary workers is expected to accelerate to around 2.0 percent, up from a 1.6 percent gain as of the first quarter of 2011, according to the Department of Labor’s latest employment cost index (ECI).
Reflecting recent labor market conditions, five of the WTI’s seven components made positive contributions to the final second quarter reading, while one factor 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 second quarter reading were job losers as a share of the labor force and the unemployment rate, both reported by DOL; industrial production, measured by the Federal Reserve Board; the share of employers planning to hire production and service workers in the coming months, tracked by BNA’s quarterly employment outlook survey; and economic forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia. The only negative factor was average hourly earnings of production and nonsupervisory workers, from DOL. The final WTI component–the proportion of employers reporting difficulty in filling professional and technical jobs, as measured in BNA’s survey–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, August 16, 2011 (preliminary third quarter)
BNA is the largest independent publisher of specialized news, analysis, and reference services 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.
To obtain Wage Trend Indicator(TM) reports by e-mail on a regular basis, contact Jerry Walsh, BNA PLUS, 800-372-1033.