Rate of annual wage growth to remain low, BNA index signals

RP news wires
Tags: business management, talent management

Private-sector employees likely will continue to experience near record-low wage increases in the coming months, predicts the final first quarter Wage Trend Indicator (WTI) released April 14 by BNA, a leading publisher of specialized news and information.

BNA said the WTI declined for the eighth consecutive quarter, to 97.16 (second quarter 1976 = 100) from 97.42 in the fourth quarter of 2009.

"Although the job market appears to have stabilized, I'm not expecting wages to turn around immediately," said Kathryn Kobe, an economic consultant who maintains and helped develop BNA's WTI database. "Anytime you have an unemployment rate near 10 percent, there's still a lot of excess labor capacity."

The rate of annual wage growth for private sector employees is expected to remain at or below the 2009 gain of 1.4 percent. That 12-month increase in the Department of Labor's employment cost index (ECI) data was down significantly from 2.4 percent in 2008 and marked a record low.

Reflecting mixed economic conditions, two of the WTI's seven components made large negative contributions to the final first quarter reading, outweighing four positive contributors. One component was neutral.

"We seem to have bottomed out in terms of labor market weakness, but I think it will still be several months before conditions improve enough for wages to turn up," Kobe 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.

More information on the Wage Trend Indicator is available on BNA's WTI home page at http://www.wagetrendindicator.com/

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