Wages are rising, with more high-pay jobs being added. Here’s the picture:
By either measure, wage rates are rising. (However, the Employment Cost Index, ECI, shows a slower growth rate for benefits expense.)
The two measures tell us about the quality of jobs. The Average Hourly Earnings (AHE) measure simply adds all wages earned, and divides by all hours worked. The Employment Cost Index, however, looks at wage growth of jobs that have not changed in responsibilities. So ECI ignores changes in the mix of jobs, while AHE includes changes in the mix. The faster growth rate of AHE tells us that businesses are hiring more high-wage workers than they previously had.
Business Strategy Implications: The tight labor market that we’ve discussed in the past is forcing wage rates up. Look for cheaper ways to hire and retain workers, such as good employee retention programs.