Rate of Annual Wage Growth to Remain Low, BNA Index Signals

ARLINGTON, Va., April 14 /PRNewswire-USNewswire/ -- Private sector employees likely will continue to experience near record low wage increases in the coming months, predicts the final first quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information.

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BNA said the WTI declined for the eighth consecutive quarter, to 97.16 (second quarter 1976 = 100) from 97.42 in the fourth quarter of 2009.

"Although the job market appears to have stabilized, I'm not expecting wages to turn around immediately," said Kathryn Kobe, an economic consultant who maintains and helped develop BNA's WTI database. "Anytime you have an unemployment rate near 10 percent, there's still a lot of excess labor capacity," Kobe said.

The rate of annual wage growth for private sector employees is expected to remain at or below the 2009 gain of 1.4 percent. That 12-month increase in the Department of Labor's employment cost index (ECI) data was down significantly from 2.4 percent in 2008 and marked a record low.

Reflecting mixed economic conditions, two of the WTI's seven components made large negative contributions to the final first quarter reading, outweighing four positive contributors. One component was neutral. "We seem to have bottomed out in terms of labor market weakness, but I think it will still be several months before conditions improve enough for wages to turn up," Kobe said.

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 two negative contributors to the final first quarter reading were the unemployment rate, reported by DOL, and industrial production, measured by the Federal Reserve Board. The four 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 and the proportion of employers reporting difficulty in filling professional and technical jobs, both tracked by BNA's quarterly Employment Outlook Survey. The neutral factor was average hourly earnings of production and nonsupervisory workers, also from DOL.

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, May 18, 2010 (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™ reports by e-mail on a regular basis, contact Jerry Walsh, BNA PLUS, 800-372-1033.

SOURCE BNA