Tuesday, October 31, 2006

Wages & Benefits Racing Upwards...

The Associated Press reports that wages and benefits paid to American workers are up in the July to September period. It's the fastest pace in more than two years. Here are the juicy bits...

  • The Labor Department reported that its Employment Cost Index was up 1 percent in the third quarter, compared to a 0.9 percent rise in the April-June period. It was the biggest quarterly increase since a similar 1 percent rise in the second quarter of 2004.
  • The increase, which was above the 0.9 percent rise that economists had been expecting, was led by a big jump in the cost of employee benefits such as health insurance and pensions.
  • For the third quarter, benefit costs rose by 1.1 percent, up from a 0.8 percent gain in the second quarter. Wages and salaries were up 0.9 percent, matching the increase in the second quarter.
  • Officials at the Federal Reserve are watching closely to see whether wage pressures are beginning to accelerate, a development that would give workers' more money in their paychecks but could fuel unwanted inflation.
  • The Fed is hoping that its two-year campaign to slow the economy by raising interest rates will do the trick to send underlying inflation rates lower without slowing growth so much that the economy topples into a recession.
  • For the 12 months ending in September, overall compensation costs were up 3.3 percent, compared to a 3 percent rise for the 12 months ending in September 2005.
  • Wages and salaries are up 3.2 percent over the past year, a significant rise from the 2.3 percent gain for the 12 months ending in September 2005. Benefit costs, however, were up 3.3 percent for the year, down from a 5 percent rise for the year ending in September 2005

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