Labor compensation costs in the U.S. for private sector workers—including pay and benefits—jumped 5.2 percent year over year through September 2022, up from a 4.1 percent increase a year earlier but down from the 5.5 percent year-over-year increase at the end of June, the U.S. Bureau of Labor Statistics (BLS) reported on Oct. 28 in its quarterly Employment Cost Index summary.
The BLS reported that:
- Wages and salaries for private-sector workers—the pay component—rose 5.2 percent for the 12 months ending in September, up from a 4.6 percent increase a year earlier. The annual increases had been 5.7 percent in the second quarter and 5 percent in the first quarter.
- The cost of benefits in the private sector rose 5.0 percent for the same 12-month period, up from a 2.6 percent increase the year before. The annual increases had been 5.3 percent in the second quarter and 4.1 percent in the first quarter.
The cost of wages and benefits for all civilian workers—private sector and state/local government—rose 1.2 percent during the third quarter and were up 5.0 percent for the year.
“Compensation growth for civilian workers has run above 5% at an annual rate for four of the last five quarters. Compensation growth likely moderates from this pace but important to note that labor productivity has been sluggish to date,” tweeted Renaissance Macro Research.
The report is “further evidence U.S. wage growth is slowing,” tweeted Colby Smith, U.S. economic editor at the Financial Times.
Mike Konczal, director at Macroeconomic Analysis, tweeted that the “Employment Cost Index, the wage measure the Fed most closely watches, slows, consistent with a soft landing” for the economy.
Inflation’s Toll
Rising pay and benefits spending is still trailing the rate of inflation by a fairly wide margin.
The value of “real” inflation-adjusted private wages and salaries fell 2.7 percent for the 12 months ending September 2022, and the inflation-adjusted value of employee benefits fell 3.0 percent for the same period, according to the Employment Cost Index report.
The consumer price index rose 8.2 percent year over year in September, near a 40-year high, the BLS separately reported on Oct. 13.
Differences by Industry
Employment costs can differ significantly among industries. Among private industry occupations, compensation cost increases for the 12-month period ending in September ranged from 4.3 percent for construction and maintenance occupations to 7.7 percent for service occupations.
Related SHRM Articles:
Persistent Core Inflation Keeps Pressure on Wages, SHRM Online, October 2022
Keeping Pay Structures Current in a Volatile Market, SHRM Online, October 2022
Wage Growth at Small Businesses Stays Strong, SHRM Online, September 2022
Related SHRM Resources:
Salary Increase Projections 2023 (and 2022), SHRM Express Request
[Need real-time, HR-reported compensation reports? Check out the SHRM Compensation Data Center]