U.S. worker pay, benefits no longer growing faster despite unemployment at 50-year low

The numbers: The lowest unemployment rate in 50 years still isn’t leading to big increases in wages and benefits for American workers.

The closely followed employment cost index rose 0.7% in the fourth quarter, the Bureau of Labor Statistics said Friday. That matched the MarketWatch forecast.

Yet the increase in wages and benefits in 2019 slowed to a 2.7% pace from a post 2008 recession high of 2.9% in 2018. Other measures of pay and benefits also signal that the growth in compensation appears to have peaked.

“It’s a bit surprising that with sustained levels of historically low unemployment we haven’t seen wages moving up above [3%],” Federal Reserve Chairman Jerome Powell said a few days ago.

What happened: Wages rose 0.7% in the fourth quarter. They make up about 70% of employment costs. Benefits make up the rest of worker compensation. They increased 0.5%.

Wages and salaries have risen 2.9% in the past 12 months, down from 3.1% in 2018.

Similarly, the increase in benefits slowed to a 2.2% yearly rate from 2.8%. That’s the slowest pace in three years.

Some workers have made out better than others, however. Wages and benefits for blue-collar workers in goods-producing industries, for instance, have risen 3.4% in the past year, the largest gain in almost 20 years.

Many manufacturers have complained about a scarcity of skilled workers, suggesting they’ve boosted compensation in part to lure workers.

The ECI reflects how much companies, governments and nonprofit institutions pay employees in wages and benefits.