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Final Second Quarter BNA Index Forecasts Little Change in Wage Growth

NEWS RELEASE

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

Arlington, Va. (July 18, 2008) - The overall pace of private sector wage growth is expected to hold steady in the coming months, based on the final second quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information for professionals.

The final reading of 100.92 for the April-May-June period marks a decline from the first quarter index of 101.06 (second quarter 1976 = 100). Over the past year, however, the WTI has fluctuated, staying within a narrow range from 100.90 to 101.06, BNA said.

“The WTI basically has shown little change in recent quarters, indicating that wage growth should continue at its current pace,” said economist Kathryn Kobe, who worked on the development of the index for BNA.

Private sector wages rose 3.2 percent over the 12 months ended in March, the same as in the prior 12-month period ended in March 2007, according to the latest employment cost index (ECI) from 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.

“Labor markets remain weak, and with no job growth taking place, the unemployment rate has increased,” Kobe said. “That tends to limit workers’ demands for higher wages, despite the current inflationary pressures.”

Reflecting the soft job market, five of the WTI’s seven components made negative contributions to the final second quarter reading, led by a decline in the share of employers reporting difficulty in filling professional and technical positions, as shown by BNA’s quarterly Employment Outlook Survey.

Contributions of Components

Also making negative contributions to the final second quarter WTI were average hourly earnings of production and nonsupervisory workers, the unemployment rate, and job losers as a percentage of the labor force, all from BLS’s monthly employment report; and industrial production, tracked by the Federal Reserve Board. The two positive components were the expected inflation rate, compiled by the Federal Reserve Bank of Philadelphia, and an increase in the share of employers planning to hire production and service workers, as measured by 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, Aug. 19 (preliminary third quarter)

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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 who developed the WTI for BNA, 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 Jerry Walsh, BNA PLUS, 800-372-1033.