Humming In The HeartlandGene Koretz
One sign that U.S. wage pressures are far from quiescent is to be found in the Midwest, where the economy has benefited from surging auto and auto-related production and a rebound in export manufactures. The boom, says economist Mark M. Zandi of Regional Financial Associates Inc., has pushed the unemployment rate in the nation's heartland below 5%--its lowest since the 1960s. And wages and salaries in the third quarter were running 3.7% more than a year ago, compared with an average increase of 2.9% for the nation as a whole.
Zandi also notes that consumer prices in the Midwest are up 3.3% from their year-earlier level--more than in the Northeast, South, or West. And despite escalating wages, labor-force participation in the region remains below its 1989 high, suggesting that tight labor markets can expect scant relief from enhanced labor-force growth. "Unless the economy slows in coming months," warns Zandi, "we're likely to see the pickup in wages and prices spread."