Annual Pay Increases for U.S. Workers Fall to 4.3%

The average annual wage increase for American workers has fallen to 4.3% in the last three years from 8.5% in 1979 and 1980, as companies have adopted tougher wage and benefits policies, a business research organization said Monday.

Intense competition from imports and non-unionized domestic rivals is making it harder for American companies to boost prices, so companies “are increasingly basing wage decisions on their own productivity and labor cost trends,” the Conference Board said in a news relese.

“This shift has helped slow wage hikes throughout the economy,” the board said, adding that companies are also moving to reduce fringe benefits.

A survey of 500 companies showed that “growing competitive pressures and two severe recessions have caused a fundamental shift in U.S. wage determination,” said Audrey Freedman, Conference Board labor economist and author of the study.

Freedman said “management has increasingly gained the upper hand in negotiations,” while “unions have lost their industry-wide influence over wages.” She said the trend will probably continue because competition is “certain to remain intense” for the foreseeable future.

Another change is that: “Companies that were willing to grant more liberal benefits to unions seven years ago are now demanding, and receiving, givebacks in key non-wage areas,” the study said.

It said 60% of the companies surveyed are seeking to tighten health benefits, and 30% want to cut back time off with pay. Seven years ago, more than 40% of the companies surveyed were willing to increase health benefits and expand vacations and holidays.

The report said that even though companies are getting tougher, the management-union climate has actually improved in recent years.