Wages Failed to Keep Up With 1990 Inflation : Economy: The 4.9% annual increase in salaries was below the 6.1% inflation rate, the government says.

Americans’ wages, salaries and other benefits rose 4.9% last year, failing to keep up with the 1990 rate of inflation, the government said today.

The Labor Department said the rise in the employment cost index, considered one of the best gauges of inflationary wage pressures, was lower than the 1989 increase of 5%.

The government also reported today that contracts settled through collective bargaining last year gave workers average annual wage increases of 3.2% over the life of the pacts.

The last time parties covered by those settlements negotiated, usually in 1987 or 1988, wage gains were smaller, averaging 2% annually over the contract term, the Labor Department said.

Wages and salaries of private industry workers inched up 0.8% in the September-December period of 1990, after seasonal adjustment, for the lowest three-month change in more than two years, the government said.

While a moderate increase in employment costs is good news for American businesses, it means that worker pay and other compensation did not rise as fast as inflation, which rose 6.1% last year.

However, private economists predict that eventually, workers probably will start to demand more to make up for the drain on their wallets brought on by sharp inflation.

“We all lost ground, but we basically lost it to the oil price shock. . . . It was like a tax increase that chewed into people’s pockets,” said Robert Dederick, chief economist at Northern Trust Co. of Chicago.

He said, however, if it had not been for higher oil prices, American workers’ compensation would have almost kept up with inflation.

Analysts note that last year’s steep increase in consumer prices was largely caused by soaring gasoline and fuel oil increases that occurred after Iraq’s Aug. 2 invasion of Kuwait. So it may be too soon to have offsetting pay gains show up in workers’ paychecks.

Today’s report said that much of the 4.9% rise in overall compensation costs last year was caused by a steep 6.6% increase in benefit costs for private industry workers, particularly rising health insurance costs.

Non-production bonuses, workers compensation insurance and employer contributions to savings and thrift plans were also reflected in the rapid growth and benefit costs.

For the year, wages and salaries for private industry workers climbed 4%, the report said, just under the 4.1% increase recorded a year ago.

Over the year, compensation gains were lower in service-producing industries, where wages, salaries and benefits rose 4.6%, than they were in goods-producing industries, where compensation rose 4.8%.