Annual Pay Increases on Tap to End 2013

Arlington, Va. — April 16

Annual wage increases for private-sector workers will likely remain close to their recent pace in the months ahead, according to the final first quarter Wage Trend Indicator (WTI) released Tuesday by Bloomberg BNA, a publisher of specialized news and information.

The index rose to 98.73 in the first three months of 2013 from 98.52 in the fourth quarter of 2012. During the past seven quarters, the WTI has fluctuated, staying within a range of 98.47 to 98.75.

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 increase in the WTI forecasts greater pressure to raise private-sector wages; a sustained decline is predictive of a deceleration in the rate of wage increases.

Reflecting mixed economic conditions, four of the WTI’s seven components made positive contributions to the final first quarter reading, while three factors were negative.

Among the WTI’s seven components, the four positive contributors to the final first-quarter reading were the share of employers reporting difficulty in filling professional and technical jobs, measured by Bloomberg BNA’s quarterly employment outlook survey; average hourly earnings of production and nonsupervisory workers and the unemployment rate, both from the U.S. Department of Labor; and industrial production, reported by the Federal Reserve Board.

The three negative factors were forecasters’ expectations for the rate of inflation, compiled by the Federal Reserve Bank of Philadelphia; job losers as a share of the labor force, from the U.S. Department of Labor; and the share of employers planning to hire production and service workers in the coming months, also from Bloomberg BNA’s employment survey.

Bloomberg 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 aims to provide timely information for business and human resource analysts and executives as they plan for year-to-year changes in compensation costs.

Source: Bloomberg BNA