Same or Slightly Better Pay Raises Expected Later in 2016

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By Larry Swisher

May 18 — The pace of annual wage increases is expected to hold steady or improve only slightly later this year, according to the latest Wage Trend Indicator released May 18.

Bloomberg BNA's index dropped to 99.99 in the second quarter from 100.07 in the first quarter. The WTI's first decline in two years suggests a temporary pause in the further acceleration of wage growth.

Kathryn Kobe, a consultant who maintains and helped develop Bloomberg BNA's WTI database, said she expects the rate of wage growth for most U.S. workers to hold steady or improve only slightly from the underlying trend of 2.5 percent in the next six to nine months.

The WTI forecasts the direction of wage trends but not the amount of acceleration or slowdown.

Components Mixed

Reflecting recent economic conditions, three of the WTI's seven components contributed to the index's second-quarter decline, while three had a positive impact and one had a neutral effect.

Helping drag down the index were the percentage of employers planning to hire production and service workers in the coming months, as shown in Bloomberg BNA's quarterly employment survey; job losers as a share of the labor force, reported by the DOL; and industrial production, measured by the Federal Reserve Board.

Acting to boost the WTI were the unemployment rate and average hourly earnings of production and nonsupervisory workers, both from the DOL, and economic forecasters' expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia.

The neutral factor was the proportion of employers reporting difficulty in filling professional and technical jobs, taken from Bloomberg BNA's employment survey.

The revised second-quarter index will be released on June 15.

For More Information

For more information, see Compensation and Benefits Library’s Bloomberg BNA's Wage Trend Indicator chapter.

To contact the reporter on this story: Larry Swisher in Washington at lswisher@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com