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Wage Gains Likely to Continue at Recent Pace, BNA Index Shows

NEWS RELEASE

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

Arlington, Va. (Oct. 16, 2007) - Private sector wage increases are expected to remain near recent levels in the coming months, according to the final third-quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information for professionals.

Although the final reading of 100.87 for the third quarter is slightly higher than the second-quarter index of 100.85 (second quarter 1976 = 100), the WTI has shown no clear trend in recent quarters, fluctuating within a narrow range between 100.78 and 100.87.

"The final third-quarter WTI suggests we're still in a holding pattern," said economist Kathryn Kobe, who worked on the development of the index for BNA. "We do not expect any acceleration in wage growth in the next several months."

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 3.3 percent over the 12 months ended in June, according to the ECI, up from a 2.8 percent gain over the year ended in June 2006.

"I think we're still on a plateau where year-over-year wage gains will continue to range between three-and-one-quarter and three-and-one-half percent," said economist Joel Popkin, who developed the WTI for BNA.

Three of the index's seven components made positive contributions to the final third-quarter reading, while three others were negative and one was neutral. Helping to boost the WTI was an increase in the share of employers planning to hire production and service workers, as shown by BNA's quarterly Employment Outlook Survey.

Contributions of Components

Also making positive contributions to the final third-quarter index were average hourly earnings of production and nonsupervisory workers, from BLS's monthly employment report, and industrial production, tracked by the Federal Reserve Board. The three negative WTI components were the unemployment rate and job losers as a percentage of the labor force, both from BLS, and the proportion of employers reporting difficulty in filling professional and technical jobs, from BNA's employment survey. The neutral component was the expected inflation rate, compiled by the Federal Reserve Bank of Philadelphia.

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 Friday, November 16 (preliminary fourth 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.