Wages and salaries in the greater Twin Cities area rose 3.2 percent for workers in private industry from December 2009 to December 2010, the second-highest growth rate among the nation’s 15 metropolitan areas with the largest private sector employment.
This is the highest rate of wage growth in the region since the first quarter of 2007, before the start of the recession, according to U.S. Bureau of Labor Statistics data (PDF).
The strong growth in compensation may give a boost to consumer confidence and spending in the regional economy. If not coupled with increased productivity, however, it can also put upward inflationary pressure on prices and, longer term, put a brake on employment growth.
Total compensation — benefits plus wages and salaries — increased 2.8 percent in the region for the 12-month period, the sixth-highest growth rate among the top metro areas. A year ago, the Minneapolis-St. Paul region saw a 1.1 percent annual increase in wages and a 0.3 percent increase in total compensation costs.
For the nation as a whole, wages and salaries rose 1.8 percent for the period while total compensation rose 2.1 percent, compared with 1.3 percent rise in wages and 1.2 percent in total compensation the year before.
Separately, the BLS reported labor productivity nationwide rose 3.6 percent for 2010, compared with 2009. Productivity increases that outpace labor costs are a positive indicator for future increases in hiring. The BLS does not report productivity changes by region.
The Employment Cost Index, which is a sample survey of businesses, measures changes in the cost of labor, unaffected by employment shifts among occupations, industries or levels of employment. The labor market region surveyed in Minnesota includes the combined metropolitan statistical areas of Minneapolis St. Paul and St. Cloud.