The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Saturday, July 29, 2006

Wage growth lowest in more than 60 years

People are working harder and more efficiently, but the already-wealthy are reaping all the rewards.

The growth of employee compensation, already thought to be the slowest in any post-World War II recovery, has been even weaker than previously assumed, the Commerce Department said Friday.

In its annual benchmark revisions to gross domestic product and gross domestic income, the government said employee compensation actually totaled $7.03 trillion in 2005, about $83 billion or 1.2% lower than previous estimates of $7.11 trillion.

Rather than growing at a 2.9% annual pace in inflation-adjusted dollars, compensation instead grew 2.3% between 2003 and the end of 2005.

Wages grew at a 1.8% real annual pace, revised from 2.2% earlier. With the workforce growing about 1.3% per year, real wages per worker were up about 0.5% per year, about half the previous estimate.

Benefits also grew slower than previously assumed, rising at an inflation-adjusted 4.9% annual rate rather than 6.0% pace originally reported.

A different picture on wages, from different data source, was revealed Friday by the Labor Department, which said the employment cost index rose 0.9% in the second quarter, the fastest growth in costs since early 2005.