Profits, Not Inflation, Lifting Wages
March 16, 1998
In some sectors of the economy, productivity and profit increases -- rather than tight labor markets and inflation -- are pushing up wages, according to economist James Glassman of Chase Securities Inc.
- Private sector compensation growth -- which measures changes in both wages and benefits -- accelerated to 3.4 percent at the end of 1997 from 3.1 percent the year before.
- Much of the 1997 rise was due to an unusual surge in the finance, insurance and real estate sectors, according to Glassman.
- Slowdowns in manufacturing and trade compensation were offset by modest pickups in services and transportation.
- Pretax profits margins of financial corporations surged to 20 percent late last year -- from 15.3 at the end of 1996 -- despite more generous payouts to employees.
Source: Gene Koretz, "Are Profits Lifting Wages?" Business Week, March 16, 1998.
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