SILVER SPRING, Md. – Wages and benefits for U.S. workers rose in the last quarter of the year, putting all of 2020 in somewhat of a normal range as the pandemic continued to rankle the economy.
Total U.S. workers compensation rose 0.7% in the October-December quarter, an increase over the previous two quarters, the Labor Department said Friday. Growth was 0.5% in the second and third quarters, down from 0.8% in the first three months of the year.
For the year, wages and benefits grew 2.5%, with wages and salaries up 2.6% and benefits, which include Social Security, grew 2.3%.
Wages and salaries grew 0.9% in the final quarter of 2020 while benefits rose 0.6%.
Compensation costs for private industry workers rose 0.5% in the quarter and 2.6% in 2020.
The data comes from the Labor Department’s Employment Cost Index, which measures pay changes for workers that keep their jobs. The data isn’t affected by the mass layoffs in the spring.
While employers are limiting increases in compensation, most are reluctant to cut pay outright. Companies generally avoid slashing pay because it can demoralize workers and send them looking for new jobs. The pay raises don't necessarily mean employers boosted pay during the pandemic, but more likely that many of the increases were already baked into existing contracts.
“Overall, compensation costs are likely to remain subdued going forward, reflective of a high level of unemployment that will restrain wages,” said Rubeela Farooqi, economist with High Frequency Trading.