Private sector workers are likely to experience higher annual pay increases in 2011, according to the final second quarter Wage Trend Indicator, which was released by the Bureau of National Affairs.
The WTI rose to 98.21, an increase from 98.01 in the first quarter, and this index has been consistently growing over the past year.
"Labor market conditions in the private sector are still improving, although very slowly," says economist Kathryn Kobe, a consultant who maintains and helped develop BNA's WTI database. "At the same time, there is a lot of uncertainty about the forward momentum in the economy, and the WTI's forecast depends on the labor market continuing to improve."
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The overall rate of yearly pay raises for both wage and salary workers is predicted to jump to approximately 2 percent, a gain from 1.6 percent in the first quarter of 2011, according to the Department of Labor's most recent employment cost index.
Of WTI's seven components, five made positive contributions to the final second quarter reading, which reflects recent labor market conditions. One factor was negative, and one was neutral.
The five position contributions include job losers as a part of the labor force and unemployment rate, both reported by DOL; industrial production, calculated by the Federal Reserve Board; the share of employers intending to hire production and service workers in the future months; and economic predictions for the inflation rate, collected by the Federal Reserve Bank of Philadelphia.
The one negative factor was production and nonsupervisory workers' average hourly wages, according to the DOL, and the one neutral component was the amount of employers citing difficulty in filling professional and technical jobs.
Traditionally, the WTI has foreseen new wage trends six to nine months before they are clear. A sustained decline in the WTI suggests the rate of private sector wage raises is slowing while a sustained increase projects greater pressure to increase wages.
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