Workers costs increase faster than salaries

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Employment costs, such as health and retirement benefits, continue to rise, affecting employees' salaries, according to The Wall Street Journal.

During the second quarter, benefit costs in the private sector were up 4 percent compared with a year ago; wages and salaries were up 1.7 percent. This is a sign employers are paying more for workers without paying their workers more.

Higher benefit costs affect profits and don't directly raise a company's output the way hiring more workers would. The decrease of a company's profits caused by paying more for benefits could discourage hiring.

Health costs don't appear to be decreasing anytime soon, and this could continue to keep wages and salaries down. The Conference Board's October survey showed that the share of those expecting their incomes to fall remains higher than the share expecting incomes to rise during the next six months.

11/3/2011

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