In a press conference Wednesday, Fed chair Jerome Powell called the index "important" because of how it accounts for the composition of the labor market.
The data tracks changes in employers' labor costs for wages and salaries, along with health, retirement and other benefits. The index is not subject to the same distortions as other measures, such as average hourly earnings, because it keeps the composition of the workforce constant.
Wage growth won't abate until the labor market turns and gets weaker, said Robert Fry, chief economist at his eponymous firm. Employers have continued adding jobs even as the economy contracted in the second quarter.
"You need a higher unemployment rate and more slack there to get wage increases back down," said Fry, who expects to see price growth start to slow before pay hikes do.
In a press conference Wednesday, Fed chair Jerome Powell called the index "important" because of how it accounts for the composition of the labor market.
The data tracks changes in employers' labor costs for wages and salaries, along with health, retirement and other benefits. The index is not subject to the same distortions as other measures, such as average hourly earnings, because it keeps the composition of the workforce constant.
Wage growth won't abate until the labor market turns and gets weaker, said Robert Fry, chief economist at his eponymous firm. Employers have continued adding jobs even as the economy contracted in the second quarter.
"You need a higher unemployment rate and more slack there to get wage increases back down," said Fry, who expects to see price growth start to slow before pay hikes do.
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