Compensation for American workers rose at the fastest annual pace since the third quarter of 2008, the Department of Labor said Friday.
The employment cost index, which measures wages and benefits for civilian workers, rose 2.7 percent over the past year, according to the Labor Department. In the first three months of the year the index rose 0.8 percent, a strong showing. In the last quarter of 2017, the index rose 0.6 percent.
The rising compensation figures indicate that low unemployment might be starting to give workers increasing bargaining power. When employers need new workers and unemployment is low, they are forced to offer better wages, benefits, and working conditions to lure workers out of their current positions. Alternatively, employers can petition the government to allow in more foreign workers to allow them to keep employment costs low.
Private sector wages drove the increase, indicating that businesses were willing to pay more for workers. Private sector wages and salaries increased 2.9 percent in the January through March period, compared with an annual increase of 2.8 percent in the October through December period.
Seventy percent of total compensation is in the form of wages and salaries. These rose 0.9 percent from the prior quarter, up from 0.5 percent.