Data from retirement clients indicate that wage growth is occurring faster than government studies indicate.
That's according to the Principal Financial Group.
It looked at new data from its retirement client firms and found that wage growth for this group is picking up more quickly than U.S. government surveys show.
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In predicting that broad wage improvement was on the way, as well as an "employees' market" in jobs, Principal used data that included the number of employees eligible for the employer's DC retirement plan in six periods:2009–2010, 2010–2011, 2011–2012, 2012–2013, 2013–2014, and 2014–2015.
Annual salary data, including bonuses, of plan participants was used to search for a trend in employee earnings growth. Such data are captured as part of a DC plan's efforts to match employee contributions.
Principal also screened data so that it included only those employees who had been working for their companies for at least one year, to eliminate hiring distortions, and also restricted its analysis to non-highly compensated employees (NHCE).
It calculated the median salary and the year-over-year changes for the same six periods from 2009 to 2015. Information on wages was captured in the first quarter on the previous year's statistics.
Principal found 2 percent job growth among its defined-contribution clients, which it said in the report were mostly small- to medium-sized businesses. But it also found 3.8 percent wage growth, which it said is "well ahead of the employment report's average hourly earnings series."
While Principal's data do not agree with broad government surveys, it says that the data are in line with lesser-known surveys and accounts for this by saying that its client companies "are typically small- to-medium sized businesses" and that the companies sampled are only DC plan participants.
"Research shows these workers have different characteristics than the broader labor population," the study said. "For instance, workers participating in company retirement plans are more likely to work full-time and be older."
The wage growth found in the study applies to full-time workers, and the study said that "full-time work dropped significantly during and after the Great Recession…" and "[t]hat matters for wages…. In fact, a recent study led by economists at the San Francisco Federal Reserve found that much of the variation in real wage growth during recessions is explained by the increasing share of part-time workers."
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