ICS Commentary - U.S. Employment Cost Index, Q1 2012
Download the ICS Commentary. (pdf)
What employees cost their employers is just 1.9% higher than it was 12 months ago, according to the new Employment Cost Index released April 27th by the U.S. Bureau of Labor Statistics. This year-on-year increase in total compensation costs is essentially flat with increases reported throughout 2010 and 2011, and signals no risk of economy-wide labor costs heating up.
According to Linda Barrington, Managing Director of the Institute for Compensation Studies, rising compensation costs will certainly not be a barrier to hiring. “As the labor market continues the slowest of crawls towards regaining jobs lost in the recession, employers should not be stymied in their hiring by employment cost inflation.” Private sector employees may feel that a 1.9 percent increase in wages and salaries over the past year is “little to cheer about,” says Barrington, “but it is the highest 12-month increase since the first quarter of 2009.” (Annual inflation (CPI-U) currently stands at 2.7 percent.)
More notable and perhaps more fortunate for employers’ bottom line is that the cost for benefits rose only 2.8 percent over the 12 months ending March 2012. This is back down to where the year-on-year growth rate sat a year and a half ago (September 2010). Deceleration in the growth rate of what employers pay for health benefit costs was a contributing factor.
Read full ICS Commentary on Employment Cost Index. (pdf)