U.S. wage increases subdued in first quarter

  • Bloomberg
  • Friday, April 29, 2016 2:46pm
  • Business

Worker pay rose as forecast in the first quarter, showing the steady drop in unemployment has yet to prompt employers to sweeten paychecks.

The 0.6 percent advance in the employment cost index from the prior three months followed a 0.5 percent increase in the fourth quarter that was smaller than previously estimated, the Labor Department said Friday. Total compensation, which includes wages and benefits, climbed 1.9 percent over the past 12 months, the smallest gain in two years.

Years of impressive employment gains have only led to gradual pay increases that are contributing to more restrained rates of spending and economic growth. Federal Reserve policymakers earlier this week pointed to further labor-market strengthening as a reason to be optimistic about incomes.

“The job market has been, by all counts, pretty strong, but we really haven’t seen the kind of pickup in wage growth that we’d normally get,” said Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida. “There’s still a lot of slack in the job market.”

The advance in the ECI matched the median projection in a Bloomberg survey of economists. Forecasts ranged from increases of 0.4 percent to 0.8 percent. The gauge measures employer-paid taxes such as Social Security and Medicare in addition to the costs of wages and benefits.

Wages and salaries typically account for about 70 percent of total employment expenses. The ECI data help color the outlook for worker pay after the March employment report showed hourly earnings increased 0.3 percent from the prior month. The year-over-year advance was 2.3 percent, the same as in February.

Because the ECI tracks the same job over time, it removes shifts in the mix of workers across industries, which is a shortcoming of the hourly earnings figures.

Wages of all employees, including government workers, advanced 2 percent from the same period in 2015, the smallest 12-month gain in two years.

Private wages rose 0.7 percent in the first quarter from the previous three months, when they increased 0.6 percent. Pay for state and local government workers advanced 0.4 percent.

Benefit costs for all non-government workers, which include some bonuses, severance pay, health insurance and paid vacations, climbed 0.5 percent last quarter and were up 1.2 percent from the same three months in 2015. That was the smallest year-to-year advance since the fourth quarter of 2009.

Fed officials this week said that “a range of recent indicators, including strong job gains, points to additional strengthening of the labor market,” according to a statement at the conclusion of their two-day policy meeting in Washington.

The central bankers expect that a rise in real solid income and buoyant sentiment have the potential of spurring consumer spending.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.