Growth in Americans' wages and benefits is slowly accelerating, rising 3.5 percent during the year ended in June - a figure well above inflation in consumer prices.
It was the biggest 12-month increase in 41/2 years and compares with 3.3 percent for the 12 months ended in March and 2.8 percent for the year finishing in June 1997, the Labor Department said today.The report illustrated why Federal Reserve Chairman Alan Greenspan told Congress earlier this month that, despite the dampening impact on the United States of the Asian economic crisis, he continues to worry more about inflation than a recession.
He's concerned that compensation increases will pressure businesses into raising their prices faster. So far, though, price inflation has remained extraordinarily tame - running at around a 1.5 percent annual rate this year.
That means more than half of the compensation increase over the past year represented real, inflation-adjusted gains.
Rapid advances in computers and other high-tech equipment have helped many companies to produce more goods and services with the same number of workers, thus allowing room for both rising compensation and healthy profits.
Wages and salaries have been increasing faster than benefits, rising 3.8 percent in the year ended in June compared with 2.4 percent for benefits. But many economists fear benefits soon will start increasing more briskly because they believe most of the cost-saving gains from the advent of managed health care have been realized.
For the second-quarter alone, the gains were 0.9 for total compensation, compared with the previous quarter, 0.9 percent for wages and salaries and 0.8 percent for benefits.