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Frequently Asked Questions
1. What is the Wage Trend Indicator™?
The Wage Trend Indicator™ is a quarterly measure designed to detect
changes in private industry wages and salaries before they become apparent
in the Bureau of Labor Statistics's employment cost index. The WTI comprises
seven components that are predictive of accelerations and decelerations
in the rate of increase in private industry wages, dating back to 1976.
WTI figures are reported monthly, beginning with a preliminary index
figure, and followed by a revised estimate, and a final estimate for
a particular quarter.
2. What are the major uses of the WTI?
The WTI is a yardstick for employers, analysts, and policymakers to
identify turning points in private industry wage patterns. The report
also provides timely information for business and human resource analysts
and executives as they plan for year-to-year changes in compensation
costs.
3. How should the WTI be used to project trends in private industry
wage patterns?
The WTI is a directional indicator of an upcoming change in the rate
of growth of wages. An increase in the WTI is designed to signal that
wage growth (measured from a year ago) will accelerate while a decline
in the WTI is a signal that wage growth will slow down. This is different
from signaling an increase or decrease in the level of wages. A decline
in the WTI does not generally indicate a decline in wage levels, only
that the rate of increase in wages has slowed.
4. How was the WTI developed?
The WTI was developed for BNA by the Washington, D.C., economic consulting
firm Joel Popkin & Co. Dr. Popkin, a top authority on the measurement
of wages and prices, and Kathryn Kobe, the firm's vice president and
chief economist, formulated the indicator by selecting the data series
that were found to be most predictive of changes in private industry
wages.
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