ECI for June 2022 (released today) demonstrates continued wage pressure, which is good and bad at the same time, especially in an inflationary environment:
Compensation costs for civilian workers increased 1.3 percent, seasonally adjusted, for the 3-month period ending in June 2022, the U.S. Bureau of Labor Statistics reported today. Wages and salaries increased 1.4 percent and benefit costs increased 1.2 percent from March 2022.
Compensation costs for civilian workers increased 5.1 percent for the 12-month period ending in June 2022 and increased 2.9 percent in June 2021. Wages and salaries increased 5.3 percent for the 12-month period ending in June 2022 and increased 3.2 percent for the 12-month period ending in June 2021. Benefit costs increased 4.8 percent over the year and increased 2.2 percent for the 12-month period ending in June 2021. (See chart 2 and tables A, 4, 8, and 12.)
WHY THIS MATTERS: inflation. Especially in a service economy (but everything else as well), this is a major “M & O” cost for companies and even local governments. If this cools as hiring slows down, great, but if not the Fed will have to continue to act. Below is a breakdown by employment type and one notable thing: local governments. Local governments (in California especially) typically follow CPI as a guide for collective bargaining adjustments. This year, soaring CPI has provided more leverage than there has been in decades for upward adjustments to wages. These adjustments are not reflected in the table below and my guess is they’re delayed.