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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (938)	11/3/1998 9:03:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Wages, Benefits Rise 3.7 Percent WASHINGTON (AP) -- American workers over the past year enjoyed the largest wage and benefit gains in 6 1/2 years -- and with low inflation, it added up to greater purchasing power. Compensation for civilian workers -- in and out of government -- rose 3.7 percent over the fiscal year that ended in September, the Labor Department said Thursday. That compared with 3 percent during the previous year and was the largest increase since the 12 months through March 1992. It's especially impressive considering inflation was running around 3 percent a year then, while during the year ended in September, it was just 1.5 percent. But with foreign financial woes already slowing U.S. economic growth and crimping corporate earnings, it may prove difficult to maintain the same pace of progress next year. ''With profit margins ... under pressure in 1999, companies will do their best to hold the line on wage settlements,'' said economist Gerald D. Cohen of Merrill Lynch in New York. John A. Challenger, who runs a Chicago outplacement firm, Challenger, Gray & Christmas Inc., said companies already are economizing in the face of rising wage costs. They publicly announced 161,000 layoffs from July to September, the most in four years. As a result, ''people will be a little more careful about asking for raises,'' Challenger said. Also, many economists believe inflation will edge up to around 2.2 percent next year, so the advance in Americans' purchasing power probably will slow. Still, even with a deterioration, labor markets will remain healthy by all but the most recent standards. The unemployment rate touched a 28-year low of 4.3 percent in the spring, then rose to 4.6 percent last month and shouldn't be much higher than 5 percent by the end of next year, analysts said. ''Companies ... may be somewhat more conservative in terms of bonuses and raises,'' said economist Lynn Reaser of NationsBank Corp. in Jacksonville, Fla. ''But ... next year should still see workers quite well off.'' The good news this year on wages can only help incumbents in Tuesday's midterm elections despite some recent slippage in consumer confidence probably reflecting the stock market's gyrations. ''The strong economy ... would indicate that we might get, more or less, the status quo in terms of the composition of Congress,'' said economist Sung Won Sohn of Norwest Corp. in Minneapolis. In a telephone survey conducted for The Associated Press last week, voters said the key issues they care about are education, health care and the economy. Another report on Thursday portrayed a reasonably resilient labor market. First-time claims for unemployment insurance declined for the first time in four weeks -- falling by 18,000 to a seasonally adjusted 301,000. However, the volume of newspaper help-wanted advertising fell slightly in September, according to the Conference Board, a private research group in New York. Thursday's wage numbers do raise questions for inflation-wary Federal Reserve policy-makers, who twice cut interest rates over the past month in an effort to inoculate the U.S. economy from the global slump. Until August, Fed policy-makers had been poised to increase rates to slow the economy and prevent wage increases from fueling inflation. Analysts said they don't believe Thursday's report is enough to dissuade the Fed from another rate cut, expected Nov. 17. And the stock market reflected that belief. The Dow Jones average of industrial stocks jumped 123 points to 8,495. The compensation gain was higher than it would have been normally because wages and benefits in finance, real estate and insurance rose 8 percent over the past year. ''This will change in the fourth quarter as the world financial crisis takes its toll on the industry,'' said economist Bill Cheney of John Hancock in Boston.