Industries

Indicator points to increases in private-sector wages

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Arlington-based BNA, a publisher of specialized news and information, says wage gains for private-sector workers are likely to improve in the coming months.

BNA’s prediction is based on the results of its fourth-quarter Wage Trend Indicator (WTI).

The indicator rose slightly in the fourth quarter of 2010 to an index of 97.29, marking the second straight gain.  Previously, the index fell steadily for more than two years. The index is based on an score of 100 in the second quarter of 1976.

“The labor market continues to improve incrementally, bit by bit,” said economist Kathryn Kobe, a consultant who helped develop the WTI database. “However, there is a large pool of unemployed workers, and overall hiring demand remains far below pre-recession levels.”

As a result, Kobe expects wage and salary growth in the private sector in the coming months to remain below 2 percent. Wages increased 1.6 percent in a 12-month period ending in the third quarter, according to the Department of Labor’s employment cost index (ECI). That was up slightly from a record low 1.4 percent in the comparable period of 2009.

BNA said that, over its history, the WTI has predicted a turning point in wage trends six to nine months before the trends are apparent in the Labor Department index. A sustained decline in the WTI predicts a deceleration in private-sector wage increases, the company said, while a sustained increase forecasts pressure to raise wages.


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