Private Sector Wage Increases to Remain Low, BNA Index Forecasts

ARLINGTON, Va., July 15 /PRNewswire-USNewswire/ -- Workers in the private sector will continue to receive historically low annual wage increases in the coming months, according to the final second quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information.

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The WTI fell to 96.85 (second quarter 1976 = 100) from 97.16 in the first quarter, marking the ninth straight decline, dating to the first quarter of 2008 in the early part of the recession, which many analysts believe ended in mid-2009.

"Although this recovery is following the general pattern of past ones, the job market is making a very slow climb out of a very deep hole," economist Kathryn Kobe, a consultant who maintains and helped develop BNA's WTI database, said. In addition, businesses continue to have difficulty borrowing money to start up or expand, "which also complicates the task of getting job growth rolling," Kobe said.

Year-over-year wage and salary increases for private sector employees in the coming months are expected to remain at or below 1.5 percent, the rate for the 12 months ended in March as measured by the Department of Labor's employment cost index (ECI). Although wage growth could slow further — to the record low of 1.4 percent in 2009 or less — it probably won't fall below 1.0 percent, Kobe said.

Reflecting recent labor market conditions, four of the WTI's seven components made negative contributions to the revised final quarter reading, outweighing three positive components.

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 four negative contributors to the final second quarter reading were the unemployment rate and average hourly earnings of production and nonsupervisory workers, 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, tracked by BNA's quarterly Employment Outlook Survey.

The three positive components were job losers as a share of the labor force, from DOL; economic forecasters' expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; and the share of employers planning to hire production and service workers in the coming months, also shown in BNA's employment survey.

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

Tuesday, Aug. 17, 2010 (preliminary third 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.

SOURCE BNA

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