ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, February 14, 1996 TAG: 9602140058
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
Americans' wages and benefits rose just 2.9 percent last year, the smallest increase on record and fresh fuel for the unhappiness of a middle class convinced it is falling behind.
The Labor Department said Tuesday that the increase in its Employment Cost Index was down from 3 percent in 1994 and was the smallest since the government began recording annual changes in 1982. The biggest factor last year was restraint in health care and other benefits, although those costs were rising more quickly as 1995 ended.
The gain barely kept worker compensation ahead of inflation. The Consumer Price Index rose 2.5 percent last year.
Businesses concerned about maintaining profits are keeping employee costs under close control, and ``basically labor is not in a position to argue,'' said Robert G. Dederick, economic consultant for the Northern Trust Co. in Chicago.
Overall job growth has been slow, and many companies have been downsizing, giving workers little leverage to seek increased wages and benefits.
``This tells the American worker that he's not sharing in the nation's productivity growth,'' said John Zalusky, an economist with the AFL-CIO. ``He's barely keeping up with cost of living.''
The reason, he contended, is that ``this nation has chosen a low road to international competition. It's chosen to compete by low wages, laying workers off, not investing in education, not investing in the work force, not investing in technology.''
In economic terms, the employment-cost index is considered one of the best gauges of inflation, since compensation represents about two-thirds of the cost of a product.
Wages and salaries - nearly three-fourths of total compensation - rose 2.9 percent last year, little changed from 2.8 percent growth in 1994.
The cost of benefits, such as health care and pensions, grew 2.8 percent, the smallest gain since the series began in 1982. Benefit costs had risen 3.4 percent in 1994.
Although worker compensation did beat the inflation rate last year, real earnings have been stagnant.
For example, while employment costs rose 0.9 percent in the fourth quarter, the growth was concentrated in benefits.
Wages and salaries rose just 0.7 percent during the October-December period, a pace unchanged from the two previous quarters and, the report said, ``in line with increases over the past three years.''
Benefit costs, on the other hand, reversed their downward trend and rose 1.3 percent as the year ended, the steepest increase since the 1.5 percent from January through March 1993. Benefit costs rose just 0.4 percent from August through September.
Analysts had attributed the recent low growth in benefits largely to business efforts to bring down the cost of health care.
``We might see a more rapid increase in the future,'' suggested Sung Won Sohn of the Norwest Corp. in Minneapolis.
Dederick agreed, although he foresaw no return to skyrocketing health care costs. He said efforts to lower costs may have played themselves out. ``Once you do it, it's done.'' he said.
LENGTH: Medium: 65 linesby CNB