12/01/2021

Are Wages and Benefits Growing Faster Than We Think?

U.S. workers’ wages and benefits may be picking up faster than previously thought.

Employer costs for employee compensation jumped 4.9% from a year earlier in March,the Labor Department said Wednesday, the second consecutive increase at that relatively robust level.

Average cost per hour worked rose to $33.49 in March, versus $31.93 a year earlier. Wages and salaries climbed 4.2% to $22.88 while benefits rose 6.4% to $10.61. Health insurance, one component of benefits, was up 2.5%.

That’s well above a 1.2% gain as recently as the third quarter of 2013 and a sign the labor market is getting tighter as employers add jobs at a healthy pace.

“The growth reported over the most recent four quarters is one of the firmest over-year-ago changes in the ECEC on record back to 1991,” Daniel Silver, an economist at J.P. Morgan Chase, said in a note to clients. “The ECEC is not one of our preferred measures of wage inflation, but its recent firming echoes the message from many other related measures that have also been strengthening lately.”

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