Why Payrolls Are Sneaking Up
The Labor Dept.'s widely quoted employment cost index (ECI) has been flashing reassuring news to inflation fighters recently: By its measure, average total employee compensation rose just 0.8% from the first quarter of 1997 to the first quarter of 1998. But the ECI has a weakness: For purposes of comparing different time periods, it makes the simplifying assumption that there is no change in the mix of jobs. Lately, though, the number of high-paying jobs has grown faster than the number of low-paying ones. So employers' average payroll costs are rising more than the ECI shows.
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