On Friday, the Bureau of Labor Statistics reported that U.S. wage growth increased by just 0.2 percent last quarter. This is the smallest increase in the wages of American workers since 1982, when the series report was first created.
In other words, today’s report showed the smallest quarterly gain in wages and benefits ever recorded.
The report from BLS measures not just salary and hourly wage earnings, but the employer spending on benefits as well. It is the only report that measures the total compensation to American workers. Economists had expected a 0.6 percent increase in total compensation for the quarter.
The significant miss in today’s report also represents a large contraction from the 1st quarter, when total employee compensation grew by 0.7 percent.
A drop in spending on employee benefits seems to be the largest factor in the underwhelming report. Wages and salaries increased 2.2 percent for the full year, a slit uptick from the year before. Spending on benefits, however, increased just 1.4 percent for the year. The year before, spending on benefits had increased 2.4 percent.
The bad news on compensation will weigh heavily on the Federal Reserve when in meets in September to contemplate an increase in interest rates.