WASHINGTON D.C.: The cost of labor in the United States rose significantly in Q2 as firms increased salaries and offered perks to fill jobs, thereby stoking fears of long-term inflation in the midst of restraints in supplies.
A 0.7 percent increase was recorded in the Employment Cost Index in the last quarter, following a 0.9-percent gain in Q1, according to information released by the U.S. Labor Department on July 30.
This pushed up the twelve-month rate to reach 2.9 percent, the highest since 2018 Q4, as compared to the Q1 figure of 2.6 percent.
Policy makers and economic analysts broadly view the Employment Cost Index as among the finer gauges of labor market slumps, as well as a core inflation projector, whilst adjusting for workforce composition, as well as any change in the quality of employment.
A Reuters poll of economists projected a 0.9 percent rise in the Employment Cost Index during Q2.
A 0.9-percent increase was recorded in worker pay after rising 1.0 percent during Q1. Also, a 3.2-percent y-o-y increase was measured in salaries and wages. Meanwhile, a 0.4-percent increase in benefits was recorded, after climbing 0.6 percent in Q1.
A shortfall of employees continues to weigh heavily on the U.S. economy, as the number of unfilled jobs in the country reached 9.2 million in May. Some 9.5 million Americans are jobless. A shortage of reasonably priced childcare facilities, coupled with rising concerns of being infected by COVID-19, are being attributed as reasons for workers, largely women, staying home. Moreover, in the wake of the pandemic, many people retired, while others ventured onto different career paths.