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Revised Second-Quarter BNA Index Signals Acceleration in Wage Increases

NEWS RELEASE

Contacts:
Karen James Cody,
BNA - Press Contact
Joel Popkin - (202) 466-9063
Kathryn Kobe - (202) 466-7720

Washington, D.C. (June 20, 2006) – A pickup in the rate of private-sector wage gains is likely in the coming months, according to the revised second-quarter Wage Trend Indicator™ (WTI) released today by BNA, a Washington, D.C.-based news publisher.

The latest WTI reading of 100.72 is up from the final first-quarter index of 100.19 (second quarter 1976 = 100), marking the eighth consecutive quarterly increase in the WTI. The last time that happened was in 1997-98.

“This month's very positive reading, coming on top of a long string of increases, suggests that an acceleration in year-over-year wage increases is imminent,” said economist Joel Popkin, who developed the WTI for BNA.

In the first quarter, private-sector wages were up 2.4 percent from a year earlier, compared with a fourth-quarter increase of 2.5 percent, according to the employment cost index (ECI) produced by the Labor Department's Bureau of Labor Statistics.

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 deceleration in the rate of wage increases in the private sector. A sustained increase predicts greater pressure to raise wages.

In June, five of the WTI's seven components made positive contributions to the index, while two components were negative, said economist Kathryn Kobe, who worked on the development of the index for BNA.

The biggest contributor to the gain in the revised second-quarter WTI was an increase in the share of employers reporting difficulty in filling professional and technical job openings, according to the quarterly BNA Employment Outlook Survey, Kobe said. “With the unemployment rate falling, labor markets are tightening, and it's clearly getting harder to find professional and technical workers,” Kobe said.

Contributions of Components

The five WTI components that made positive contributions to the revised second-quarter index were: employers' difficulty in filling professional and technical jobs and employers' hiring plans for production and service workers, both based on the quarterly BNA Employment Outlook Survey; expected inflation, compiled by the Federal Reserve Bank of Philadelphia; and the national unemployment rate and average hourly earnings of production and nonsupervisory workers, both from BLS's monthly employment report. The two negative WTI components in June were industrial production, measured by the Federal Reserve, and job losers as a percentage of the labor force, from BLS's employment report.

BNA's Wage Trend Indicator ™ was 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.

More information on the Wage Trend Indicator is available on BNA's home page at: www.wagetrendindicator.com.

The next report of the Wage Trend Indicator™ will be released on:

Tuesday, July 18 (final second quarter 2006)

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BNA is the foremost 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 the Daily Report for Executives.

Dr. Popkin 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 almost 35 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 Ted Gideon, BNA PLUS, (800) 372-1033.