U.S. Workers’ Pay, Benefits Climb 5.2%

Wages, salaries and other benefits paid to American workers rose 5.2% in the 12 months ending in September, the government reported today.

The Labor Department said its employment cost index, considered one of the best gauges of inflationary wage pressures, was pushed ahead by a sharp 6.8% rise in benefit costs for private industry workers.

The government blamed much of the last year’s steep increase on the rising cost of health insurance. Non-production bonuses, workers’ compensation insurance and a rise this year in the Social Security tax rate also contributed to the rapid spurt in benefit costs, the Labor Department said.

A year ago, benefit costs had jumped 6% for the 12-month period ending in September, 1989.

In another report today, the Labor Department said contracts settled so far this year through collective bargaining gave workers average annual wage increases of 3.3% over the life of the pacts.

For the 12-month period ending in September, settlements that were reached provided wage adjustments averaging 3.5% a year over the contract life, off slightly from the 3.6% peak reached during the previous 12-month period.

Robert Dederick, chief economist at the Northern Trust Co. of Chicago, said the 5.2% rise in the employment cost index showed a disturbing underlying wage inflation rate of about 5%.