According to the Washington-based Bureau of National Affairs, its Wage Trend Indicator fell to 97.14 during the first quarter of 2010, down from 97.42 in the last quarter of 2009. That's the eighth straight decline and a record low for the WTI, which was inaugurated in the second quarter of 1976 with an initial value of 100.
Designed to predict and interpret trends in U.S. industry wages six to nine months out, the WTI is comprised of seven components that have been shown, according to the bureau, to be "predictive of accelerations and decelerations in the rate of increase in private wages."
Five are based on federal economic statistical series, including industrial production and inflation expectations derived from the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters. The other two components, including a survey that gauges the number of firms reporting difficulties in filling jobs, come from the bureau's quarterly Employment Outlook Surveys.
As the following chart illustrates, the BNA index has loosely tracked year-over-year changes in the nominal value of average hourly earnings for nonfarm payrolls, reported monthly by the Labor Department's Bureau of Labor Statistics.
The WTI, is according to the bureau, "a directional indicator of an upcoming change in the rate of growth of wages." A rise in the index indicates that wage growth with accelerate, a decline indicates that wage growth will slow -- not that wages will actually decline.
Recently, however, the downtrend in average hourly earnings growth has not kept pace with the dramatic slide in the WTI, which suggests that growth in wages and salaries has more room to fall. That is despite claims from policymakers and economic analysts that the economy is on the road to recovery.
Under the circumstances, the disconnect between Wall Street and Main Street appears set to widen further, as surveys of sentiment and other indicators reveal widespread uncertainty and dissatisfaction with current conditions. That may well lay the groundwork for growing social and political discord in the months ahead.