Employment Costs Rise and Layoff Fears Fall in Tight US Talent Market

Employment Costs Rise and Layoff Fears Fall in Tight US Talent Market

The US Labor Department’s Employment Cost Index, a measurement of employers’ wage and benefit costs nationwide, increased 0.8 percent in the first quarter of this year, the Associated Press reports, a slight increase from 0.5 percent in the previous quarter and the highest quarterly growth rate since December 2007:

The index has shown steady improvement as the U.S. unemployment rate has fallen to 4.5 percent. The modest advance in the first quarter indicates that wage gains haven’t accelerated to a pace that would worry the Federal Reserve about inflation. A recent Fed report showed that overall wage increases remained modest, although businesses were being forced to offer bigger increases to workers with skills that are in short supply. …

In the past year, salaries and benefits for all civilian workers have risen 2.4 percent. That’s better than the 2.2 percent for last quarter, but below the roughly 3.5 percent generally considered consistent with a healthy economy. For the 12 months ending in March 2016, wage and benefit growth was 1.9 percent.

The uptick in the index is welcome news for US employees, many of whom have seen their wages stagnate in recent years even amid steady job growth and falling unemployment rates, even though wage growth is not as robust as economists would like to see. Wage figures in March’s jobs report disappointed observers after signs of a possible turnaround in December.

In another indication of how tight the US labor market is right now, a new survey of US employees from Gallup finds that their fears of being laid off this year are at a record low:

The current 8% of full- or part-time employees who say they are “very” or “fairly” likely to be laid off in the next 12 months is, by one percentage point, the lowest Gallup has recorded since first asking the question in 1975. The latest figure comes from Gallup’s annual Economy and Personal Finances poll, conducted April 5-9. …

Across the 42-year span in which Gallup has asked this question, an average of 14% have said they are “very” or “fairly” likely to be laid off, but concerns about layoffs have reached as high as 21% in 2010 as unemployment approached double digits after the Great Recession. The current 8% of employees who say it is “very” or “fairly” likely they will be laid off this year is down seven points from one year ago. U.S. workers are much more likely to say it’s “not too likely” they’ll be laid off (29%). The majority, 62%, say it is “not likely at all.”