Coverage: Wage growth rises at fastest rate in a decade
U.S. workers are seeing the largest nominal wage increase in a decade, the Labor Department reported Wednesday, as companies compete harder for employees than they did in recent years.
Heather Long of The Washington Post had the news:
Wages rose 2.9 percent from September 2017 to September 2018, according to the Labor Department’s Employment Cost Index for civilian workers, a widely watched measure of pay that does not take inflation into account.
That is the biggest increase — not adjusted for inflation — since the year that ended in September 2008.
Prices have risen significantly in the past year, especially for gas and rent. Adjusted for inflation, workers’ wages grew 0.6 percent over the year, making the increase the largest since 2016, according to the Labor Department.
Sluggish pay growth has been one of the biggest problems in this recovery, but employers are finally having to hike wages at a more normal level typically seen during good economic times.
Sylvan Lane of The Hill reported that wage growth has lagged job growth since the recession:
Wage growth slowed substantially after the great recession and has lagged behind the massive growth in U.S. jobs and equity markets throughout the recovery. With unemployment at 3.7 percent, the uptick in wage growth suggests that businesses are ramping up efforts to expand their payrolls with greater compensation.
The ADP national employment report, also released Wednesday, showed private businesses adding 227,000 jobs in October, beating economists’ expectations for an increase of 189,000. The Labor Department will release its jobs report on Friday.
The U.S. economy appears to be in solid shape heading into 2019, boasting unemployment near record lows and a strong 3.5-percent growth rate in the third quarter.
Even so, the lagging stock market, declining global growth, lagging business investment and trade wars between major economies have raised concerns about an impending slowdown.
Jeff Cox of CNBC.com reported that wages have been helped by minimum wage laws in some states:
Overall compensation costs for civilian workers rose 2.8 percent, tamped down in part by the small rise in benefit costs, which rose 1.9 percent for the 12-month period ending in September. Employers have been looking for non-salary measures to retain workers, but may have to start increasing wages to attract and retain talent.
In addition to the tighter job market, various states, communities and private companies have passed minimum wage increases, adding to inflation pressures.
At an occupational level, compensation costs increased 4.8 percent for information technology and 3.5 percent for sales and office and service occupations.
State and local government compensation costs rose just 2.5 percent, just one-tenth of a point more than the increase for the same period a year ago.