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follow Patrick 2018 Aug 1, 5:39pm
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By TED HESSON 08/01/2018 10:00 AM EDTWith help from Andrew Hanna and Ian KullgrenWAGES ON THE RISE: The pay picture finally looks a bit brighter, Harriet Torry reports in the Wall Street Journal. “U.S. workers received their biggest pay increases in nearly a decade over the 12 months through June,” writes Torry, “a sign the strong labor market is boosting wages as employers compete for scarcer workers.”The Labor Department’s Employment-Cost Index (which measures wages and salaries, which constitute 70 percent of compensation, plus benefits, which constitute 30 percent) was 2.8 percent percent higher in June 2018 than in June 2017. Wages and salaries also rose 2.8 percent over the previous year. It was, Torry writes, “the strongest gain for both measures since September 2008.”The failure of wages to rise significantly during nine years of recovery from the Great Recession of 2007-9, even as unemployment dropped to 4 percent, has been an enduring economic puzzle. A Journal survey of economists back in April blamed sluggish wage growth on “low productivity growth, demographic changes, and foreign competition and globalization.” (Fewer than half of respondents blamed it on “hidden slack in the labor market or government regulation.”)News of the brisk annual rise in compensation costs came on the heels of last week’s news from the Commerce Department that GDP growth exceeded 4 percent during the second quarter, prompting President Donald Trump on Twitter yesterday to quote the CNBC headline, “Worker pay rate hits highest level since 2008.” We’ll find out Friday morning, when the Bureau of Labor Statistics releases its monthly jobs report, whether pay continued to rise briskly in July. More from the Journal here. Read the BLS report here.
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Wages on the rise