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Revised BNA Index Predicts Weaker Wage Gains

NEWS RELEASE

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

Arlington, Va. (June 16, 2009) – Private sector workers likely will see smaller annual pay increases in the coming months, according to the revised second quarter Wage Trend Indicator™ (WTI) released today by BNA, a leading publisher of specialized news and information.

The WTI dropped to 98.58 (second quarter 1976 = 100) from 99.35 in the first quarter, for the index’s fifth consecutive quarterly decline.

“The latest WTI is signaling that year-over-year wage increases for most workers are going to be quite small this year,” said Kathryn Kobe, an economist who worked on the index’s development for BNA.

Annual wage gains in the private sector overall will be less than the 2.0 percent increase posted in the first quarter, the lowest on record since the Department of Labor began tracking such figures in 1980, Kobe said. In calendar year 2008, wages grew 2.6 percent, according to the department’s employment cost index (ECI).

The slow pace of wage growth likely will continue into early 2010 after the expected end of the recession and beginning of economic recovery later this year, Joel Popkin, who developed the index for BNA, said. “The labor market remains weak even after a recovery is under way, and that weighs down wage growth,” Popkin said.

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 private sector wage increases, while a sustained increase forecasts greater pressure to raise wages.

Contributions of Components

Reflecting the economic downturn, six of the WTI’s seven components made negative contributions to the revised second quarter reading, while one component was positive. The negative factors were a decline in the share of employers planning to hire production and service workers in the coming months and the proportion reporting difficulty in filling professional and technical jobs, both from BNA’s quarterly Employment Outlook Survey; job losers as a share of the labor force, the unemployment rate, and average hourly earnings of production and nonsupervisory workers, all reported by DOL; and industrial production, tracked by the Federal Reserve Board. A rise in forecasters’ expectations for inflation, compiled by the Federal Reserve Bank of Philadelphia, was the only positive factor.

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, July 15, 2009 (final second 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 Daily Report for Executives.

Dr. Joel 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.