Paychecks rise at modest 0.6 percent pace in 3rd quarter

31 Oct 2015 | Author: | No comments yet »

Paychecks rise 0.6 percent in 3rd quarter.

U.S. workers’ paychecks grew at a moderate rate over the summer, showing little sign of accelerating from the sluggish growth that has persisted since the recession ended. Despite some encouraging recent job numbers — unemployment is falling, and an average of 198,000 jobs per month were added to payrolls over the last year — wage growth in the United States is still sluggish, according to experts analyzing Labor Department statistics released Friday.U.S. labor costs rebounded in the third quarter following a springtime slump, but evidence of a sustained breakout in wages remains elusive despite steady job gains and low unemployment. The employment cost index, which tracks wages, salaries and benefits, rose 0.6 percent in the July-September quarter from the April-June quarter, the Labor Department said Friday.

That pace is in line with the average wage gains through much of the recovery. ”It looks like we are back to seeing more of the same in terms of wage pressure remaining modest,” J.P. In theory, business owners need to try harder to attract employees as unemployment falls, which should translate into more generous salaries and wages.

Morgan JPM -1.47 % economist Daniel Silver said in a note to clients. “We continue to think that compensation will pick up as the labor market tightens, but there has been limited evidence of firming wage inflation so far in the various measures that we track.” The figures are likely to provide scant evidence one way or the other for Federal Reserve officials monitoring whether the economy is strong enough to begin raising interest rates from near zero, possibly as soon as December. As the unemployment rate declines and gets closer to levels consistent with a strong economy, employers typically are forced to raise pay to attract and keep workers. But because of the large pool of people who are out of work but not actively seeking jobs — as well as those who are working part-time but would prefer full-time work — those who do have jobs have little leverage to ask for higher pay. There are about 6 million people in the U.S. who are “involuntary part-time workers,” meaning they would have full-time jobs given the choice, according to the Bureau of Labor Statistics.

Wages and salaries for civilian workers, which reflect more than two-thirds of employee costs, grew 0.6% in July through September, while benefits rose 0.5%. That marked a strong bounce back from the unexpected nosedive in compensation costs from April through June, but economists noted the second-quarter data were likely skewed by swings in incentive compensation earned by workers in sales jobs. Many economists say that may be because there are millions of people not counted in the official unemployment rate who would be willing to take full-time jobs if they were offered. Another measure of wages from the Labor Department’s monthly jobs report showed workers’ hourly wages, excluding benefits, dipped by a penny in September after jumping in August. She noted that the percentage of workers who quit each month has not reached pre-recession levels, an indicator that some workers feel no choice but to remain in their jobs despite unsatisfactory terms.

The “quits” rate has held at 1.9 percent since April, compared to 2.3 percent in November 2006, shortly before the beginning of the recession. “People just don’t feel like they can quit their jobs,” Gould said, and that lack of exit power means business owners, not employees, are calling the shots on wages. A separate report released Friday by the Commerce Department showed Americans’ personal income grew just 0.1% in September, the smallest monthly gain since March.

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