Wages, benefits up 0.9 percent

WASHINGTON – Employment compensation for American workers rose a moderate 0.9 percent in the April-June quarter as restrained wage growth helped offset another sharp increase in benefit costs, the government reported Thursday.

The Labor Department said the rise in its Employment Cost Index for the second quarter compared to a 1.1 percent gain in the first three months of this year.

The slowdown came entirely from a modest rise in benefit costs, which climbed 1.8 percent in the second quarter compared with a 2.4 percent jump in the first quarter.

Wages and salaries, stymied the past three years by a weak economy and lackluster job growth, climbed 0.6 percent in the second quarter, the same increase as the first quarter of this year.

Over the past 12 months, wages rose by 2.5 percent, down from a 2.7 percent increase for the 12 months ending in June 2003 and far below the 4 percent rise for the 12 months ending in June 2000, when the country was still in the midst of a record 10-year economic expansion.

However, benefit costs have risen much more rapidly, climbing by 7.2 percent for the 12 months ending in June, the biggest 12-month gain since early 1990.

“Though wages remain under control, benefit costs are still soaring at an unacceptable pace,” said Joel Naroff, head of a Holland, Pa., forecasting firm.

Democratic presidential candidate John Kerry has charged that President Bush has not done enough to promote stronger job and income growth or help Americans shoulder the soaring costs of health care.

In a second report Thursday, the government said new claims for unemployment benefits edged up slightly last week, climbing by 4,000 to 345,000, indicating the labor market continues to improve after three years of lackluster job creation.

Last week’s increase followed a drop of 9,000 the previous week. Claim figures have been volatile over the past month because auto plants shut down earlier than normal for retooling, which skewed the department’s seasonal adjustments.