Employment Costs Remains Steady in the Fourth Quarter

Fourth quarter employment costs rose 0.8 percent, a pace similar to that of the last six quarters. Similarly, wage and benefit costs have grown at very steady rates too. Despite easing labor conditions, the Fed has little to fear from the benign rate of wage inflation at present.

Wage & Benefit Costs Remain Steady

• Total compensation costs were up 3.3 percent over the last year driven higher by wages. Benefit cost increases are more controlled than a few years ago.
• Year-over-year, wages in private industry rose 3.3 percent which helps explain modest fourth quarter consumption growth.

Private Industry Benefits Still Under Control

• Growth in benefits payments for private workers is moderating as companies appear to have better control over increases in medical care costs. Union benefit expenses have dropped significantly over the last four years.
• State and local government compensation remains elevated reflecting the solid hiring trends in this sector.

Wachovia Corporation
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