Wage Costs Continue To Climb

July 26, 2001 (PLANSPONSOR.com) The Employment Cost Index, the broadest measure of US labor costs, rose by 0.9% in the second quarter of 2001, implying that employers are still paying more to hold onto their workers, despite a softer job market.

The increase in the index follows a 1.1% gain the previous quarter, but is in line with the 1% increase expected by analysts.

Wages and salaries rose by 1%, the same rate as in the previous quarter, however benefit costs increased by 1%, compared with 1.3% rise seen in the first quarter of 2001.

However, for the 12 months ending June this year, the index increased by 3.9%, in comparison to the 4.4% gain seen for the same period the previous year.

The index gauges what employers pay in wages salaries and benefits and is closely followed by investors as an indicator of wage inflation. If wage inflation threatens, interest rates often rise, while bond and stock prices fall.