Slim Pickings For U.S. Workers
U.S. workers' wages and benefits rose in the first quarter at the slowest pace in three years as the spotty economic recovery translated into less generous compensation packages.
In a related development, fewer Americans filed new claims for state unemployment benefits last week, suggesting that the economic recovery is helping some laid-off workers get jobs.
The employment cost index, a closely watched gauge of inflation, rose 0.8 percent in the January-March quarter, down from a seasonally adjusted 1 percent rise in the previous quarter, the Labor Department reported Thursday.
The first-quarter increase in compensation was the smallest since a 0.4 percent gain posted in the first quarter of 1999.
The wages and salaries component of the index, viewed by economists as the best measure of changes in workers' compensation, grew 0.8 percent in the first quarter, slightly slower than the 0.9 percent rise recorded in the fourth quarter.
The costs of benefits such as health insurance and vacations outpaced gains in wages and salaries, increasing 1 percent in the first quarter. However, that was the smallest gain since the third quarter of 2000 and was down from a 1.2 percent increase registered in the fourth quarter of last year.
On the employment front, the Labor Department said jobless claims fell by 31,000 to a seasonally adjusted 421,000 for the week ended April 20. Wall Street economists in a Reuters poll were expecting claims to fall to 425,000.
The four-week moving average, considered a more reliable gauge of employment conditions because it irons out weekly fluctuations, rose for the eighth week in a row, hitting 452,500.
That was the highest level reached since November of last year when the economy was hemorrhaging jobs after the Sept. 11 attacks.
Even though claims fell in the most recently reported week, the level for the past several weeks has remained well above the key 400,000 level economists consider recessionary.
But the decline in last week's claims was taken as good news by economists, who say the labor market is showing signs of improvement.
"This is what we we're looking for -- a drop down to the 425,000 level. It'll probably fall back down to the 400,000 level in the next two weeks or so," said Drew Matus, economist with Lehman Brothers in New York.
In a sign of better days ahead for the U.S. labor market, the number of workers continuing on jobless benefits declined by 93,000 to a seasonally adjusted 3.7 million for the week ended April 13, the department said.
The still-weak labor market will likely be a chief concern of the Federal Reserve when policy-makers there meet next month to set interest rates.
Most economists believe the Fed, at its next policy-setting meeting on May 7, will hold off on raising rates, taking into account a string of data that has shown a weaker recovery than expected.