WAGE GROWTH
Should Speed Up
"With a galloping economy, the challenge will
be to rein in labor costs."
This is a very good article to help you interpret
the Government's three measures of compensation
growth: Average Hourly Earnings, The Employment
Cost Index, and The Productivity Gauge. Currently,
they are each predicting a different rate for the
coming growth in wages.
The article discusses each of the three measures,
and points out their differences. For example,
The Employment Cost Index does not take into
account increasingly prevalent perks such as
signing bonuses and exercised stock options.
The article goes on the explain that wage growth
peaked in mid-1998, and that in a lagged response
to lower energy prices, both employers and
employees built expectations of lower inflation into
their salary increases and pay demands.
Now, with global demand for energy products
recovering, the situation is reversing and inflation
will begin to put pressure on wages.
The question for business is: can you rely on
efficiency gains to offset higher pay?
The article goes into much more detail and is
really worth reading.
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