WASHINGTON — Wages and salaries advanced in the first quarter at the fastest pace since 2006, indicating American companies are having to offer bigger paychecks to attract skilled workers.
The Labor Department’s Employer Costs for Employee Compensation report on Wednesday showed average pay for all civilian workers climbed 4.2 percent from the first three months of 2014 to $22.88 an hour. That compares with a 4 percent year- over-year gain in the fourth quarter and is the strongest since July-September 2006.
“The upward trends in these labor costs measures does not come as a surprise,” Harm Bandholz, chief U.S. economist at UniCredit Group in New York, said in a note to clients. “They are the inevitable result of the combination of a tighter labor market, the lack of skilled workers, and a record-high number of job openings.”
Including benefits such as health insurance, total compensation increased 4.9 percent in the January-March period, matching the previous three months as the biggest gain since records began in 2004.
The ECEC has shown bigger increases in worker compensation than the Labor Department’s Employment Cost Index, which registered a 2.6 percent year-over-year advance in the first quarter.
The ECI data are designed to track the same occupations and industries, while the ECEC factors in the changing composition of the labor force as workers switch from one type of job to another. The latter, for example, would show a bigger increase in wages if a greater share of the workforce was moving into higher-paying industries from those that pay less.
“Its recent firming echoes the message from many other related measures that have also been strengthening lately (although generally less substantially than the ECEC),” Daniel Silver, an economist at JPMorgan Chase in New York, said in a note to clients.
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