(Bloomberg) — Wages and salaries in the United States rose in the fourth quarter at the same pace as in the previous three months, indicating gradual tightening in the labor market has yet to put pressure on employers to boost pay.
The 0.6 percent advance in worker paychecks matched the increase in the third quarter, the Labor Department said Friday. The agency’s employment cost index, which also includes benefits, climbed 0.6 percent in the fourth quarter from the prior three months, matching the median forecast of 60 economists surveyed by Bloomberg.
Steady payrolls growth and joblessness lingering close to a seven-year low are projected to prompt employers to boost wages as they vie to attract and keep skilled workers. Signs of a long-awaited pickup in wage growth would give Federal Reserve policy makers greater confidence that inflation will rise toward their 2 percent goal.
“The labor market over the past year has shown several signs that wage acceleration was just around the corner, but it hasn’t materialized yet,” said Thomas Simons, a money-market economist in New York at Jefferies Group LLC. “With every passing month, we get more signs that it will come at some point.”
Bloomberg survey forecasts for the ECI ranged from unchanged to 0.9 percent increase. The gauge measures employer-paid taxes such as Social Security and Medicare in addition to the costs of wages and benefits.
Wages and salaries typically account for about 70 percent of total employment expenses. The ECI data help color the outlook for worker pay after the December employment report showed hourly earnings were $25.24 on average, down one cent from the prior month. They climbed 2.5 percent from a year earlier, less than the 2.7 percent gain projected in the Bloomberg survey of economists.
Because the ECI tracks the same job over time, it removes shifts in the mix of workers across industries, which is a shortcoming of the hourly earnings figures.
Wages of all employees, including government workers, advanced 2.1 percent from the same period in 2014, the same as in the third quarter.
Private wages rose 0.6 percent in the fourth quarter from the previous three months, when they increased 0.7 percent. Pay for state and local government workers advanced 0.4 percent.
Benefit costs for all workers, which include some bonuses, severance pay, health insurance and paid vacations, climbed 0.7 percent, reflecting a jump among state and local government employees. Compared with the same three months in 2014, benefit expenses were up 1.3 percent.
See also: Goldman Sachs: Health care costs are about to start pushing core inflation higher