Wages and benefits grow at slowest pace in 3 years

By CHRISTOPHER RUGABER AP Economics Writer

WASHINGTON (AP) — Wages and benefits for U.S. workers rose at the slowest pace in three years in the April-June quarter, a sign that businesses are holding back on pay as well as cutting jobs in the coronavirus recession.

Pay and benefits increased 0.5% in the second quarter, according to the government’s Employment Cost Index, released Friday. That is down from 0.8% in the first three months of the year. Wages and salaries rose just 0.4%, while benefits jumped 0.8%.

Employers shed 22 million jobs in March and April before rehiring about one-third of those workers in May and June. That has left the unemployment rate at 11.1%, one of the highest rates since the Depression. With the unemployment rate so high, workers who still have jobs have less ability to resist pay cuts or demand raises.

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The ECI tracks pay and benefits for existing jobs, so it isn’t affected by layoffs or shifts in the types of jobs that exist in the economy.

Also Friday, a separate measure of personal income compiled by the Commerce Department found that overall U.S. income fell by 1.1% in June, following a steeper drop of 4.4% in May. Those figures reflect the massive job losses of recent months.

Pay and benefits increased 2.7% in the year ending in June, the same as in June 2019. That suggests that the impact of the coronavirus has not yet lasted long enough to impact the annual figures.