by Subdued wage growth disguises rising cost of total compensation.The next US monthly employment report (published this Friday) will once again be scrutinised for signs that wage growth is on the rise. While wage growth has been improving in recent years, the pace has remained glacial. Average hourly earnings were up 2.6% y-o-y in February, a relatively subdued pace when taking into account near full employment (the unemployment rate was 4.1% in February).There are many factors explaining the restraint in US wage growth, among them the loss of employee bargaining power in recent decades, ongoing automation, the low inflation environment and paltry productivity gains.One factor that deserves attention is wages’ shrinking share of total employee compensation as the contributions of health and
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Thomas Costerg considers the following as important: Macroview, US Chart of the week, US unemployment rate, US wage growth, US wages
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Subdued wage growth disguises rising cost of total compensation.
The next US monthly employment report (published this Friday) will once again be scrutinised for signs that wage growth is on the rise. While wage growth has been improving in recent years, the pace has remained glacial. Average hourly earnings were up 2.6% y-o-y in February, a relatively subdued pace when taking into account near full employment (the unemployment rate was 4.1% in February).
There are many factors explaining the restraint in US wage growth, among them the loss of employee bargaining power in recent decades, ongoing automation, the low inflation environment and paltry productivity gains.
One factor that deserves attention is wages’ shrinking share of total employee compensation as the contributions of health and pension benefits soars. The growing cost of benefits is making US employers more reluctant to accord increases in basic wages.
Rising healthcare and pension costs could continue to put pressure on wage growth. While wages are likely to continue to improve in the coming months in tandem with the labour market, they may not rise hugely.