WASHINGTON — Brisk economic growth in 1998 pushed up Americans' wages and benefits by 3.4%, the fastest growth in five years and a slight improvement over 1997.
The gain reported Thursday by the Labor Department in its employment cost index marked the third consecutive year of improvement. Wages and benefits rose 3.3% in 1997, 2.9% in 1996 and 2.7% in 1995.
At the same time, inflation has been decreasing, so workers' purchasing power has shown significant gains.
But not everyone saw a healthy increase in compensation last year. Some regions and occupations recorded considerably slower growth, reflecting spillover from the world economic slump and other factors.
Computer programmers on the West Coast, real estate agents and Wall Street traders were among those who fared the best, while factory workers in the Midwest and minimum-wage earners overall saw lackluster gains.
In manufacturing, wages and benefits grew a subdued 2.7%, and in health services, compensation was up a minuscule 0.9%. Retail trade compensation increased 3%, although in the final three months of the year it was down 0.2%
Compensation increased a robust 5% at public utilities, reflecting severance payments resulting from deregulation, particularly at telephone companies. In finance, insurance and real estate, it rose 5.9%, reflecting record home sales and the expanding mutual fund industry.
By region, compensation grew 4.9% in the West but went up just 2.6% in the South. It rose 3.3% in both the Northeast and the Midwest.
The same numbers that cheer employees have raised concern at the inflation-wary Federal Reserve and among businesses, particularly manufacturers, which face a profit crunch as they attempt to compete against firms operating in Asian and Latin American countries with devalued currencies.
Excluding benefits such as health insurance, the increase in wages and salaries slowed slightly in 1998, to 3.7%, compared with 3.8% in 1997. Benefit costs, however, increased 2.6%--the strongest pace in four years--up from 2.1% in 1997.
In the fourth quarter, wage and benefit costs rose 0.7%, compared with 1% in the July-September period. Wages and salaries were up 0.7%; benefits rose 0.6%.
Separately, the Labor Department said seasonally adjusted first-time applications for unemployment benefits dropped sharply last week for the second week in a row, after shooting up during late December and early January.
