By Rich Miller May 12, 2014 9:00 PM PT
Yellen has cited three gauges showing hourly earnings, employment costs and compensation in arguing that salary increases are muted. Yet economists including Torsten Slok of Deutsche Bank AG say other data are better indicators of where pay is headed: higher.
“The trend is certainly not the Fed’s friend,” said Slok, Deutsche’s chief international economist in New York. He cited a speed-up in pay of production workers, which rose to a year-on-year rate of 2.3 percent in April from 1.3 percent in October 2012.
Faster growth of labor compensation would have big economic implications and play into the debate over how fast the economy will grow and whether the Fed needs to keep stimulating it. It would boost household spending, which accounts for about 70 percent of gross domestic product. Since compensation represents about two-thirds of company costs, it would also put upward pressure on inflation and make it harder for the Fed to keep interest rates near zero.
“We’re starting to see some wage inflation,” M. Keith Waddell, president of Menlo Park, California-based staffing company Robert Half International Inc. (RHI), told analysts on April 23. “We saw rising pay rates for our temporary staff.”
more.......
http://www.bloomberg.com/news/2014-05-13/yellen-wage-signals-showing-slack-may-be-missing-cost-speedup.html
http://www.bloomberg.com/infographics/2014-05-13/yellen-wage-indicators-may-be-missing-upward-turn.html

