Over the next few months, private-sector workers are expected to experience little or no change in annual wage, according to the revised third quarter Wage Trend Indicator released by Bloomberg BNA, a publisher of specialized news and information.
The index is now at 98.49, a decline from 98.67 in the second quarter, and it has fluctuated over the past year between 98.4 and 98.67.
"The latest reading reflects the general softness of the economy and the lack of robust labor market conditions needed to improve wage growth," says Kathryn Kobe, an economist and consultant who maintains and helped develop Bloomberg BNA's WTI database. "There's a lot of uncertainty around the U.S. election and how and when the federal government plans to remedy the fiscal cliff at the end of the year."
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Traditionally, the WTI has estimated changes in wage trends six to nine months before they are seen in the Department of Labor's employment cost index. When there is a sustained increase in the WTI forecasts, there is greater pressure to increase private sector-wages, and a sustained decline suggests a deceleration in the rate of wage increases.
Kobe also says she anticipates little change in private-sector annual wage gains overall from the 1.8 percent growth over the year ended in the second quarter, as measured by the ECI. The WTI only predicts the direction of wage growth, not the magnitude.
Similar to current economic conditions, of the seven parts of the WTI, six parts made negative contributions to the revised third quarter reading. Only one factor was neutral.
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