New data from the Bureau of Labor Statistics (BLS) showed that total employment costs (employer-paid taxes such as Social Security and Medicare in addition to the costs of wages and benefits) in America continued to grow at an elevated rate in the second quarter of 2018. Specifically, total compensation costs for civilian workers increased by 0.6 percent in Q2, a slight decline from Q1’s 0.8 percent gain but still enough to lift the year-over-year pace of growth to 2.8 percent. That is the fastest annual rise in employment costs since 2008 and not too surprising as more businesses are forced to boost worker compensation in response to widespread labor shortages. Moreover, wages and salaries rose by 0.5 percent in Q2, while benefits jumped by 0.9 percent. That disparity makes sense considering that the use of benefits can sometimes be a more cost-effective way to deal with a labor shortage that also encourages continued work (supportive of talent retention).
Sources: Econoday, U.S. DoL, FRBSL
Post author: Charles Couch