Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 29, 1992 TAG: 9201290061
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
WE OUTRAN INFLATION
American workers kept ahead of inflation in 1991. Wages, salaries and benefits advanced 4.3 percent against the 3.1 percent rise in prices, government figures showed Tuesday.Still, workers' income and benefits - totaled in the Labor Department's employment cost index - were off from the 4.9 percent gain in 1990. And that suggests "the long sustained malaise of the economy is starting to take a toll on wage increases," said economist Robert G. Dederick of the Northern Trust Co. in Chicago.
Slower wage inflation helps keep the nation's overall inflation rate down. That, Dederick said, is the "good side" of the report. "The downside is that it reduced people's ability to buy goods" and keep the economy growing.
Workers took a beating in 1990 when inflation soared to 6.1 percent while their earnings were held to a 4.9 percent gain.
The jump in inflation in 1990 - the steepest since 1981 - was due in part to soaring gasoline and fuel oil costs that followed Iraq's August invasion of Kuwait.
But since the Persian Gulf conflict ended, fuel prices have dropped and the Federal Reserve's grip on credit has restrained prices in other areas.
The Labor Department said contracts settled through collective bargaining last year gave workers average annual wage increases of 3.3 percent over the life of the pacts. The last time workers covered by union settlements negotiated, generally in 1988 or 1989, wage gains were smaller, averaging just 2.8 percent.
The rise in overall compensation costs last year slowed from a year earlier because of smaller increases for state and local government workers, both in wages and salaries and in benefits.
"The severe pressure on state and local governments has really manifested itself," Dederick said. "There was a real crackdown on wage increases in that area."
Some key findings include:
Compensation for union workers rose 4.6 percent, compared to 4.3 percent for non-union workers. This pattern was the same in both the goods-producing and service sectors and reversed a trend that had prevailed for nearly a decade.
The pace of compensation gains moderated over the year, from 1.1 percent and 1.3 percent during the first two quarters to 0.8 percent and 0.9 percent in the final two.
Wages and salaries, which rose 3.6 percent for the year, also slowed, dropping from a 1.1 percent gain in the first quarter to 0.9 percent as the year ended. They had risen 4.3 percent during 1990.
For the year, wages and salaries for private-industry workers rose 3.6 percent, down from 4 percent in 1990. Government wages and salaries rose 3.5 percent, down from 5.3 percent a year earlier.
Compensation gains in goods-producing industries ranged from 4.1 percent in construction to 4.6 percent in both durable and non-durable manufacturing.
Within the service sector, increases ranged from 1.5 percent in banking, savings and loan and other credit agencies to 5.2 percent in public utilities and private colleges and universities.