Marketplace Report: Rising Employment Costs The Labor Department says that over the past three months, employment costs rose at their fastest pace in two years. Costs including wages, salaries and benefits are all up, adding to the risk of inflation. Steve Tripoli of Marketplace tells Madeleine Brand what the numbers mean for the economy.
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Marketplace Report: Rising Employment Costs

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Marketplace Report: Rising Employment Costs

Marketplace Report: Rising Employment Costs

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MADELEINE BRAND, host:

Back now with DAY TO DAY. Maybe you missed this, but according to federal statistics, you got a raise. New Labor Department statistics say wages and benefits had their biggest jump in two years last quarter. Steve Tripoli from MARKETPLACE joins us now. Steve, that sounds like some good news, right?

STEVE TRIPOLI: Well, Madeleine, it is. The overall bottom line is good for workers, you know. A raise is a raise. If you're a worker, beating inflation is the name of the salary game; and benefits are up, too. The wage and benefits numbers for the year through September were a full percentage point ahead of inflation. And the reason for all this is that labor markets are tight, so employers have to pay higher to keep you. And labor markets are projected to stay tight for a while.

BRAND: So any downside?

TRIPOLI: Well, there is, but it doesn't directly apply to wages and benefits. Those gains are real. Joel Naroff, the chief economist at Commerce Bank, says the worry is that rising wages may be greeted with less cheering by our friends at the Federal Reserve.

Mr. JOEL NAROFF (Chief Economist, Commerce Bank): The concern, at least that some of the analysts and market people have for this number, is that with the Fed worrying about inflation, anything that points to the potential of higher inflation is a concern. And this is a number that raises questions about where inflation's going to be going.

TRIPOLI: And, you know, Madeleine, what happens when the Fed gets a whiff of inflation, they raise interest rates.

BRAND: So it sounds a bit like the workers just can't get a break. Either you don't get a raise or you have higher interest rates.

TRIPOLI: Well, from a worker's point of view, take the money, Madeleine. You know, worry about interest rates later, unless you really have lots of debt or are shopping for a loan. But even then, you know, a bird in hand beats that possible rate hike.

BRAND: Now you said earlier that benefits rose also. Does that mean that workers can worry less about things like, let's say, health insurance premiums?

TRIPOLI: Well, for now basically yes. You know, at least in terms of recent months. A lot of folks are paying more for key benefits like insurance premiums, but the latest numbers keep the average worker ahead of even those costs. You know, I think the bigger long-term question is the delicate balance in this global economy. If wages go up, workers like it. But that's an added cost for their employers, and that can affect the company's competitive balance globally, which in turn can affect your job. So that's not to say workers can't keep moving ahead, just that in this new economy it's going to continue to be a little bit more tricky.

By the way, Madeleine, coming up later today on MARKETPLACE, the last in our series of debates about big issues that aren't high on the campaign agenda this season. This time, our commentators will spar over education.

BRAND: Thank you, Steve. Steve Tripoli of public radio's daily business show MARKETPLACE. And MARKETPLACE is produced by American Public Media.

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