BNA Index Predicts Pickup in Workers' Annual Wage Gains

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Jun 15, 2011, 12:12 ET

ARLINGTON, Va., June 15, 2011 /PRNewswire-USNewswire/ -- The pace of annual wage gains for private sector workers is expected to improve later this year, according to the revised second quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information.

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The WTI has risen for four straight quarters to 98.21 (second quarter 1976 = 100), up from 98.01 in the first quarter of 2011.

"The economy is still moving forward — it's just not moving forward very fast," economist Kathryn Kobe, a consultant who maintains and helped develop BNA's WTI database, said. "We're seeing small incremental improvements in the labor market," Kobe said.

She expects a pickup in the rate of annual wage growth to around 2.0 percent by the end of the year, based on the current path of economic recovery.

In the first quarter, wages and salaries in the private sector overall were up 1.6 percent from a year earlier, according to the Department of Labor's latest employment cost index (ECI).

Reflecting an improved labor market, five of the WTI's seven components made positive contributions to the revised second 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 revised 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™ 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™ will be released on Thursday, July 14, 2011 (final 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™ reports by e-mail on a regular basis, contact Jerry Walsh, BNA PLUS, 800-372-1033.

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.

Joel Popkin, Ph.D.:
http://www.profnetconnect.com/joel_popkin_phd

Larry Swisher:
http://www.profnetconnect.com/larry_swisher

SOURCE BNA