Posts filed under “Wages & Income”
From Torsten Sløk of Deutsche Bank:
The first chart below shows that over the past year employer costs have risen significantly. The second chart shows that the rise is driven partly by a significant increase in bonuses. The third chart shows that the uptrend in wages can been seen across all parts of the services sector. And the fourth chart shows that wages are rising faster for unionized workers. This data, the Employer Costs for Employee Compensation (ECEC), is created using the same raw data that goes into the Employment Cost Index (ECI). The difference between the ECI and the ECEC is that the ECI controls for changes in the industrial-occupational composition of jobs. In other words, the ECI is intended to indicate how the average compensation paid by employers would have changed over time if the industrial-occupational composition of employment had not changed from the base period. The ECEC data on the other hand, does not control for the effect of a change in the composition of jobs. For example, if a company goes from hiring fewer customer services workers to hiring more R&D workers then it would show up in the ECEC data as higher wage inflation (because R&D workers generally have higher wages than customer services workers).
This happens to be consistent with the data showing that employment growth has been stronger for high-wage occupations and it is also consistent with the recent strong uptrend seen in private sector R&D spending (see also the charts I have sent out about this). In the 1990s we saw the opposite, with the ECI above the ECEC because more lower paying jobs were created. For more discussion of this and the differences between the ECI and the ECEC see also this BLS article here: http://www.bls.gov/opub/mlr/cwc/explaining-the-differential-growth-rates-of-the-eci-and-ecec.pdf. The bottom line remains that there are several ways of measuring wage inflation and although average hourly earnings remains flat, several of the other measures of wages are showing signs of broad-based wage pressure.
I come not to bury bonuses, but to praise them. Yesterday the New York State Office of the Comptroller released itsannual report. The report is chock full of great tables and charts (seethis, this, and this). The key takeaways include these data points: • The bonus pool for securities industry employees who work in New York City grew…Read More
Last week, we learned that Wal-Mart was giving the lowest-paid of its hourly employees a raise. In a blog post, Wal-Mart Chief Executive Officer Doug McMillon said that as of April, the company will pay a minimum of $9 an hour. That is $1.75 more than the federal minimum wage of $7.25, which has been unchanged…Read More