ARLINGTON, Va., May 17, 2011 /PRNewswire-USNewswire/ -- The pace of wage growth for private sector workers is expected to pick up slightly in the coming months, resulting in a modest gain by the end of 2011, according to the preliminary second quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information.
The WTI increased slightly to 98.22 (second quarter 1976 = 100), according to the preliminary second quarter reading, up from 98.01 in the first quarter of the year. If confirmed by the revised and final readings, it would be the fourth consecutive increase in the forward-looking indicator.
"The slight increase in the WTI indicates that most of the employment factors that constitute the index have improved somewhat," said economist Kathryn Kobe, a consultant who maintains and helped develop BNA's WTI database. "There has been enough improvement in the employment situation that one would expect to see a modest acceleration in wage and salary growth by the end of the year."
Annual gains in wages and salaries overall in the private sector likely will improve to around 2.0 percent by the end of the year, up from a 1.6 percent gain over the year ended in March, 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 preliminary 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 preliminary second quarter reading were economic forecasters' expectations for the rate of inflation, as compiled by the Federal Reserve Bank of Philadelphia; job losers as a share of the labor force and the unemployment rate, both reported by the Labor Department; industrial production, as reported by the Federal Reserve; and the share of employers expecting to hire production and service workers in the coming months, tracked by BNA's quarterly employment survey. The negative contributor was average hourly earnings of production and nonsupervisory workers, also reported by DOL. The remaining component of the WTI, the share of employers reporting difficulty filling professional and technical jobs as determined by BNA's employment 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 Wednesday, June 15, 2011 (revised 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.