Pay and benefits for U.S. workers saw modest growth from July through September, which suggests the unsteady labor market is holding back compensation.
The employment-cost index grew 0.4% from the second quarter to the third, the Labor Department said Wednesday. Although the employment-cost index grew, it fell short of the 0.5% gain expected by economists.
70% of the employment-cost index is comprised of wages and salaries, which grew 0.3% during the most recent quarter, but benefit costs rose 0.8%.
On a year-over-year basis, total employment costs rose 2.0%, with wages up 1.7% and benefits up 2.6%. Health benefits once again drove the gain, rising 3.0% from the previous year.
Wages and benefits increased despite the soft labor market, which left little bargaining power for workers seeking better salaries and benefits.
Unemployment fell to 7.8% in September, the lowest level since 2009, but economists expect the jobless rate to rise to 7.9% when the government releases its October measure of the labor market Friday. Economists also expect the report to show that the U.S. added 125,000 jobs during the month.
Still, salaries more than kept pace with mild prices increases in the last year. The personal-consumption-expenditures index, which helps measure and track inflation, rose 1.7% in September from a year earlier, according to the Commerce Department.
Compensation among the private-sector also saw a 0.4% growth in the third quarter, according to Wednesday’s data. Wages increased 0.4%, while benefits rose 0.7%. In addition, state and local-government workers’ compensation grew 0.3% as wages rose 0.2% and benefits increased 0.8%.
Local governments continue to work within the constraints of a tight budget. Overall outlays from state and local governments fell in the third quarter even as the federal government boosted spending.
Related Sources: WSJ.com