Corporate tax-reform and deregulation have been a potent tonic for U.S. economic growth, and now that growth is translating into higher pay. The employment cost index, which measures the total compensation paid to employees including wages and benefits, is up 2.8% over the last year—the fastest rate of growth since 2008.
For employees in private industry, the news is even better. Wages and salaries are up 3% over the last year—faster than the average wage growth over the last two-decades.
Bloomberg has more details.
The latest results indicate employers are offering better compensation packages to workers amid an ongoing shortage of qualified workers. In another sign of broad-based demand for labor, the ECI showed increases in manufacturing, construction and service-related industries.
While labor costs are rising, there are few signs that they’ll trigger heightened inflation pressures. Economists expect the Federal Reserve will still raise interest rates gradually this year.
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