Employment costs rise 0.5 percent, driven by benefits

Posted by Dave Dorman

Find me on:

July 31, 2012

The latest report from the U.S. Bureau of Labor Statistics found that employment costs in the country rose modestly in the second quarter of this year, increasing notably faster than in the months before.

Overall the Employment Cost Index rose by 0.5 percent from the previous quarter, the fastest rate since the second quarter of last year. At the same time, year-over-year increases slowed slightly from the first three months of the year to a rate of 1.7 percent, from 1.9 percent as of March.

These moderate gains though are a good bit lower than economists generally hope for, however.

"Wage growth has slowed very sharply. In real terms, we’re actually negative," Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC, told Bloomberg. "Consumer fundamentals are not very sound right now. Aggregate demand is softening."

For recruiting, however, the bigger news is that wages actually grew slower than the index as a whole, at only 0.4 percent. The larger gains came from benefits, which rose 0.6 percent driven primarily by declining, but still rapid, increases in health benefits costs.