NCPA - National Center for Policy Analysis

Wages Continue To Rise In Tight Labor Market

August 23, 1999

By and large, American workers are satisfied by their level of compensation, polls show. Government data show that pay raises have been getting larger in recent years, and economists think the government's figures even underestimate the size of those increases.

  • Primark Decision Economics reports that compensation per hour for nonfarm jobs rose by 4.3 percent annually in both the second quarters of 1998 and 1999 from the year-earlier period -- compared to increases of 2.2 percent in 1995, 3.7 percent in 1996 and 3.2 percent in 1997.
  • Meanwhile, unemployment has fallen every year since it stood at 5.7 percent in the second quarter of 1995 -- hitting 4.3 percent for this year's second quarter.
  • Primark economist Allen Sinai believes government statistics understate the magnitude of wage pressures because the government misses or inadequately measures the value of stock options, signing bonuses and annual bonuses tied to a company's performance.
  • Also, he says, when a worker leaves a $20,000 job in one industry in favor of a $30,000 post in another, the switch is not captured in wage data as a pay raise.

A July survey by the Society for Human Resource Management and found that more than eight out of 10 hiring experts now expect candidates to receive counteroffers regarding salary and benefits.

Source: Beth Belton and Stephanie Armour, "Raising Worker Expectations, USA Today, August 23, 1999.


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