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Revised BNA Index Signals Little Change in Rate of Wage Growth

NEWS RELEASE

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

Washington, D.C. (June 19, 2007) – The rate of private sector wage increases is likely to remain close to recent levels in coming months, according to the revised second-quarter Wage Trend Indicator™ (WTI)released today by BNA, a Washington, D.C.-based news publisher.

The revised WTI of 100.84 is up from the final first quarter index of 100.80 (second quarter 1976 = 100). Since rising steadily for nine quarters to a peak of 100.85 in the third quarter of 2006, the WTI has fluctuated within a narrow range.

"The revised second-quarter WTI indicates overall wage growth is unlikely to accelerate further within the next several months, although strong demand for certain skilled workers could push up their wages," said economist Kathryn Kobe, who worked on the development of the index for BNA.

Private sector wages rose 3.6 percent over the 12 months ended in March, up from a 2.4 percent gain over the year ended in March 2006, 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 a deceleration in the rate of wage increases in the private sector. A sustained increase predicts greater pressure to raise wages.

"The latest WTI continues to suggest wages are in a holding pattern, where year-over-year gains will continue to be in the range of 3 percent," said economist Joel Popkin, who developed the WTI for BNA.

Four of the WTI's seven components made positive contributions to the revised second-quarter index, while two components were negative, and one was neutral, Kobe said. Helping to boost the index was an increase in the proportion of employers reporting difficulty in filling professional and technical jobs, based on BNA's quarterly Employment Outlook Survey.

Contributions of Components

Also making positive contributions to the revised second-quarter index were the expected inflation rate, compiled by the Federal Reserve Bank of Philadelphia; the unemployment rate, from BLS; and industrial production, tracked by the Federal Reserve Board. The two WTI components that made negative contributions were average hourly earnings of production and nonsupervisory workers, from BLS's monthly employment report, and the proportion of employers planning to hire production and service workers, from BNA's employment survey. The neutral component was job losers as a percentage of the labor force, from BLS.

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 home page at http://www.wagetrendindicator.com.

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

Tuesday, July 17 (final second quarter 2007)

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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 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 Ted Gideon, BNA PLUS, (800) 372-1033.