Annual worker pay gains rose at fastest pace since 2008
Washington – U.S. workers saw their annual wages and benefits rise in the second quarter at the fastest pace in nearly a decade, a sign that the low unemployment rate is forcing employers to raise pay to attract and keep workers.
Pay and benefits for all U.S. workers increased 2.8 percent in the April-June quarter from a year earlier, the most since the third quarter of 2008. Total compensation for private industry workers – which excludes state and local employees – rose 2.9 percent, the best since the second quarter of 2008.
The unemployment rate is near an 18-year low of 4 percent, leaving employers scrambling to find the workers they need. There are more open jobs than there are unemployed workers, according to government data, for the first time since records began in 2000.
A separate measure of wages and salaries for private sector workers rose 2.9 percent in the past year, matching March’s gain and the highest in nearly a decade.
Still, pay gains slowed in the second quarter. Total compensation – which includes pay and benefits such as health insurance – increased 0.6 percent, down from 0.8 percent in the first three months of the year.
Wages and salaries, which make up about 70 percent of total compensation, slowed even more, to 0.5 percent from 0.9 percent in the first quarter.
Even the relatively solid gains aren’t enough to keep up with slightly higher inflation, which rose 2.9 percent in the 12 months ending in June. That means after inflation, wages and salaries for private sector workers was flat.
The last time the unemployment rate was this low, in 2000, hourly pay gains were rising at a roughly 3.5 percent to 4 percent annual rate.