Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts

Friday, July 28, 2017

No sign of wage inflation as labor costs remain low

Wage inflation remains low
Employers continue to have the upper hand in controlling labor costs, as the government’s broadest gauge showed that private industry wages and salaries have increased only 2.4% and costs for benefits have risen only 2.2% over the past year.

While job growth continues to be strong and the unemployment rate falls, employers continue to find workers without having to steeply increase pay rates or provide more expensive benefits to attract and retain their employees.

Gains in wages actually slowed in the second quarter of 2017 with the Employment Cost Index’s quarterly report on private industry wages and salaries recording a seasonally adjusted increase in June of 0.5% as compared to a 0.9% increase for the first quarter of the year.

Benefit costs rose by 0.6% over the three months ending in June, the same percentage increase recorded for the previous quarter.

For workers in the South, private industry wages rose at a slower pace than for the nation as a whole, increasing 1.7% for the 12 months ending in June.

In comparison, the Consumer Price Index for All Urban Consumers (CPI-U) has risen 1.6% for the U.S. and 1.5% for the South Region in the 12 months ending in June.

As a result, the costs for employing workers continues to rise faster than the overall inflation rate, although the rate of increase for labor costs remain subdued.

Some economists believe that without a substantial increase in wage inflation resulting in larger take-home pay for workers, overall inflation will remain below the Federal Reserve’s target of 2%.