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Pace of Wage Growth May Pick Up Later in 2008, BNA Index Signals

NEWS RELEASE

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

Arlington, Va. (March 18, 2008) - The rate of private industry wage growth is likely to pick up later this year, according to the revised first quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information for professionals.

The revised reading of 101.08 for the first quarter is up from the fourth quarter 2007 index of 100.96 (second quarter 1976 = 100). If confirmed by more complete data in the final first quarter WTI to be released in April, the increase would signal somewhat higher upward pressure on private sector wages in the coming months.

“We don’t anticipate an acceleration in wage increases in the immediate future, but the latest WTI suggests that we may see a modest pick-up in the rate of growth toward the end of the year,” said economist Kathryn Kobe, who worked on the development of the index for BNA.

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 December, up from a 3.2 percent gain over the year ended in December 2006, according to the latest ECI.

“The revised first quarter WTI indicates that if we manage to avoid a recession in the first half of this year, wage pressures are likely to build when the economy starts picking up in the latter half of 2008,” Kobe said.

Reflecting mixed economic conditions, three of the WTI’s seven components made positive contributions to the revised first quarter reading, while three others were negative contributors. One other component was neutral.

Contributions of Components

Making positive contributions to the revised first quarter index were average hourly earnings of production and nonsupervisory workers, from BLS’s monthly employment report, and increases in the share of employers planning to hire production and service workers and reporting difficulty in filling professional and technical jobs, as shown by BNA’s quarterly Employment Outlook Survey. The three negative WTI components were the unemployment rate and job losers as a percentage of the labor force, both from BLS; and industrial production, tracked by the Federal Reserve Board. 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 Wednesday, April 16 (final first quarter 2008).

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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.