Thursday, August 02, 2007

Higher Employment Costs A Bad Thing?

The AP is spinning so fast with this little nugget that it's getting me nauseous.

Employers' cost to hire and retain workers picked up slightly in the second quarter but not enough to fan inflation fears.

The Labor Department reported Tuesday that compensation costs — including wage, salaries and benefits — rose by 0.9 percent in the April-to-June quarter. That was up a bit from the first quarter's 0.8 percent rise.

The second quarter's increase matched economists' expectations. Economists look closely at labor costs for any signs that they might be generating inflation. A solid employment climate has made it easier for some workers to command higher wages and benefits.

Federal Reserve Chairman Ben Bernanke said the central bank's biggest concern is if inflation doesn't recede as policymakers anticipate. The Fed looks closely at the price of goods and services as well as various labor cost barometers as it tries to gauge inflation pressures.

So people are making more, which apparently that's a bad thing?