By Eric Morath 

Americans' compensation is growing, but workers might not notice it in their regular pay.

The value of benefits -- including bonuses and vacation time -- grew at a faster rate in the 12 months ended in June than wages and salaries, according to data the Labor Department released Tuesday.

That extended a long-running but slow shift in compensation toward benefits and away from wages.

The cost of benefits for private-sector employers rose 3% in June from a year earlier, while the cost of wages and salaries advanced 2.7%.

The benefit gain was driven by a nearly 12% increase in bonuses and other forms of supplemental pay. Paid leave, including vacation time, rose 4% in June from a year earlier.

The improved perks point to a job market that has shifted in the workers' favor. The unemployment rate, at 3.9% last month, is holding just above a 18-year low, employers have added jobs for 95-straight months and the number of job openings exceed the number of unemployed Americans actively looking for work.

"Bonuses and supplemental pay speak to labor market conditions, and workers are in a good spot to get a little more," said Ryan Sutton, a district president for staffing agency Robert Half. "Companies are still reluctant to move base wages up too much. It's a lot harder to take that away than bonuses."

The increase in bonus compensation in part reflects lump sum payments that many large companies, including AT&T Inc. and Comcast Corp., gave to employees after Congress approved a package of tax cuts.

Mr. Sutton said bonuses are closely tied to corporate profits, and while the tax cuts likely improved bottom lines for many companies, profits have been growing at a strong clip for several years.

President Trump's economic advisers argued in a recent paper that growth in overall compensation is a better measure of how workers are faring than wages alone.

Overall compensation has grown faster than wages at least since the recession ended in 2009.

"Bonuses and paid leave are the ones growing fastest lately," said Kevin Hassett, chairman of the president's Council of Economic Advisers, earlier this month. "Employees appreciate such benefits just as much as cash, and that's why we look at the sum, rather than one in isolation."

Growth in bonuses has been more pronounced in the past year than earlier in the expansion, and has accelerated since 2015. Bonus payments were unchanged in June from March, the last time the data were collected. The data aren't seasonally adjusted, making monthly comparisons potentially misleading, but the lack of movement could suggest that at least some of those payments may not be repeated.

Lawrence Mishel, an economist at the Economic Policy Institute who formerly worked for several labor unions, said the bonus and benefit growth are more reflective of several years of falling unemployment than recent tax cuts.

"Overall wage and compensation growth does not provide much in the way of bragging rights for tax cutters," he said. "Especially given the expectation of rising wages and compensation amid low unemployment."

Increased bonus payments could also indicate firms are using one-time payments to recruit or retain workers.

Tuesday's report showed the cost of health-care coverage and other insurance rose 2.3% from a year earlier. The cost of retirement and savings benefits fell slightly from a year earlier in June.

The Employer Costs for Employee Compensation report is among several Labor Department measures of earnings. Most show a modest acceleration in average pay this year, but with growth relatively subdued compared with other periods of extremely low unemployment.

Average hourly earnings for private-sector workers rose 2.9% in August from a year earlier, according to the department's employment report released earlier this month. That measure comes from a different survey.

Due to its methodology, the Labor Department cautions against reading too much into trends over time found in the compensation report. But it is still of interest to economists because it provides specific details on the cost of various types of benefits not found in other reports.

Write to Eric Morath at eric.morath@wsj.com

(END) Dow Jones Newswires

September 18, 2018 17:17 ET (21:17 GMT)

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