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Survey: Pay Raises Rare Despite Hiring 10/20 06:19

   U.S. businesses were much less likely to boost pay in the third quarter than 
in previous months, even as hiring remained healthy, a sign that wage gains may 
remain weak in the coming months.

   WASHINGTON (AP) -- U.S. businesses were much less likely to boost pay in the 
third quarter than in previous months, even as hiring remained healthy, a sign 
that wage gains may remain weak in the coming months.

   A quarterly survey by the National Association for Business Economics found 
that only 24 percent of companies increased wages and salaries in the 
July-September quarter. That's down from 43 percent in the April-June quarter 
and the first drop after three straight increases.

   Yet the firms still added jobs at a healthy pace, which usually pushes wages 
higher as employers compete for workers. A measure of hiring in the survey 
dipped in the third quarter but remained near a three-year high. The figures 
suggest that the number of people out of work remains high enough that 
companies aren't under any pressure to raise pay.

   And just one-third of respondents said they expect their companies will 
boost wages in the October-December quarter, about the same proportion as three 
months ago.

   Despite healthy job gains this year, there were still 9.3 million people 
unemployed in September, according to government data. That's up from 7.6 
million before the Great Recession. More than 7 million Americans are working 
part-time but are looking for full-time work, which gives employers an even 
larger pool of potential employees to choose from.

   The NABE surveyed 76 of its member economists in late September. The 
economists work for companies or private trade associations.

   Weaker sales and profits may have also made companies reluctant to boost 
pay. Just 49 percent of respondents said their company's sales rose in the 
third quarter, down from 57 percent in the second quarter and the smallest 
proportion in a year.

   Profits also were squeezed, with 14 percent of firms reporting smaller 
profit margins. That was the largest proportion to do so in a year.

   The survey's other findings included:

   --- Respondents were only modestly concerned about slower growth in Europe. 
Only 7 percent of firms said a slowdown there would have a significant negative 
effect, while 44 percent said it would have a minor negative effect. Forty-six 
percent said it would have no impact and just 3 percent said it would have a 
minor positive effect. Still, the survey was conducted before weak economic 
data from the region caused sharp drops in U.S. stock markets in the past two 
weeks.

   --- More than three-quarters of economists surveyed expect the Federal 
Reserve will begin raising its benchmark short-term interest rate in the second 
quarter of 2015. Still, 84 percent said a small increase in rates in the 
short-term wouldn't hurt their businesses.

   --- Two-thirds of the firms said they are having no difficulty filling their 
open jobs, a good sign for hiring. Government data shows that job openings are 
at the highest level in nearly 14 years. Some economists worry that many of the 
unemployed don't have the skills needed for the jobs that are available. But 
the NABE survey suggests that companies are mostly able to fill their available 
jobs. That's also probably a reason that wages increases are less common. If 
companies were having more difficulty hiring workers, they might offer higher 
salaries.


(KA)


 
 
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