Workers' wages continue to climb, but not as fast as inflation

Workers' wages continue to climb, but not as fast as inflation

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Why Walmart is cutting prices on certain items 02:13New York (CNN Business)Employers continued hiking workers' pay, but the increases still weren't enough to compensate for the even faster rise in inflation.

Wages and salaries for civilian workers increased 1.4% in the second quarter and 5.3% over the year ending in June, according to the Bureau of Labor Statistics' Employment Cost Index, released Friday. Both measures show swifter growth than in the first quarter.However, the picture is not as rosy once inflation is taken into account. Wages and salaries declined 3.5% over the past year, after adjusting for rising prices.The super-tight labor market during the Covid-19 pandemic has forced employers to increase their compensation to fill open positions and hold on to their staff. But this is adding to concerns about the duration and pervasiveness of inflation.The Employment Cost Index report is a favorite of the Federal Reserve, which is closely monitoring the extent to which skyrocketing inflation is boosting wages to help it determine how much to hike interest rates. The US central bank on Wednesday approved its second-straight three-quarters of a percentage point rate hike as it tries to tamp down rising prices.Read MoreIn a press conference Wednesday, Fed chair Jerome Powell called the index "important" because of how it accounts for the composition of the labor market.The data tracks changes in employers' labor costs for wages and salaries, along with health, retirement and other benefits. The index is not subject to the same distortions as other measures, such as average hourly earnings, because it keeps the composition of the workforce constant.Cost of benefits coolsOverall, the growth in employers' compensation costs moderated slightly in the second quarter, coming in at 1.3%, before accounting for inflation. That compares to 1.4% in the first quarter but was still slightly higher growth than economists expected.However, over the course of the year ending in June, total compensation costs jumped 5.1%, a quicker pace than the 4.5% increase for the year ending in March. The growth in benefits costs, which takes into account the amount paid for retirement, health and other benefits, dipped to 1.2% for the spring, compared to 1.8% in the prior quarter. Benefits costs increased 4.8% over the most recent 12 months, compared to 4.1% over the year ending in March.This story is developing and will be updated.

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