Saturday, November 11, 2006

U.S. Wages grow by most in 4 years

Despite the mainstream media complaints about only the "rich" (do people making $50k count?) real hourly wages are growing at the fastest pace in four years, and the costs of benefits (i.e. healthcare) are on track to grow at the smallest rate since the 1990's. So real disposable income for U.S. workers is on the rise and should underpin consumer spending .

"Employers are getting the upper hand on the surging costs of benefits, particularly those of health insurance. But while companies are making many employees pay a bigger share of health-care premiums, the tighter labor market is also leading Corporate America to give back some of those savings in the form of fatter paychecks.

Third-quarter figures from the employment cost index (ECI) showed benefit costs rising at a 3.3% pace from a year ago. That's the slowest gain in at least five years.........Costs in 2006 are on track to grow at the smallest rate since the late 1990s. Looking ahead, human resource companies Hewitt Associates and Towers Perrin are forecasting further deceleration in employer health-care costs for 2007.

The ECI data, which adjusts for changes in the composition of the labor force, showed that wages and salaries grew by 3.2% from a year ago, the biggest rise in more than four years. Those figures validate other pay indicators, such as average hourly earnings, which stood at a multiyear high in September.

Meanwhile, overall inflation is also slowing down as gasoline, oil, and natural gas prices have fallen off summer highs. The combination of improving income gains and slower inflation will translate into higher inflation-adjusted wages for workers and provide plenty of support for consumer spending."

By James Mehring in New YorkBy James C. Cooper - Businessweek - Nov 13, 2006

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