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BNA Index Signals Slight Pick-up in Pace of Wage Growth

NEWS RELEASE

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

Arlington, Va. (Nov. 16, 2007) - The pace of private sector wage growth appears likely to accelerate slightly in the coming months, according to the preliminary fourth quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information for professionals.

The preliminary reading of 100.94 for the fourth quarter is up from the third-quarter index of 100.87 (second quarter 1976 = 100). If confirmed by more complete data in the final fourth-quarter WTI to be released in January, the increase would be the index's fourth consecutive quarterly gain since a decline in the fourth quarter of 2006 to 100.78.

"The preliminary fourth-quarter WTI suggests that we are going to see a slight pick-up in the rate of wage increases as long as the labor market remains firm," said economist Joel Popkin, who developed the WTI for BNA. "Next month's revised index should give us a move definitive picture," Popkin added.

Over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the employment cost index (ECI) produced by the Labor Department's Bureau of Labor Statistics. 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.

Private sector wages rose 3.4 percent over the 12 months ended in September, according to the ECI, up from a 3.0 percent gain over the year ended in September 2006.

"If we don't see some loosening up in this labor market, workers will have more clout to ask for wage increases as they respond to higher energy prices," said economist Kathryn Kobe, who worked on the development of the index for BNA.

Although only two of the WTI's seven components made positive contributions to the preliminary fourth-quarter reading, they outweighed four negative contributors, while one component was neutral.

Contributions of Components

Making positive contributions to the preliminary fourth-quarter index were a rise in the share of employers planning to hire production and service workers, as shown by BNA's quarterly Employment Outlook Survey, and the unemployment rate, from BLS's monthly employment report. The four negative WTI components were job losers as a percentage of the labor force and average hourly earnings of production and nonsupervisory workers, both from BLS; industrial production, tracked by the Federal Reserve Board; and the expected inflation rate, compiled by the Federal Reserve Bank of Philadelphia. The neutral component was the proportion of employers reporting difficulty in filling professional and technical jobs, from BNA's employment survey.

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, Dec. 18 (revised fourth quarter 2007) .

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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 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.