Skilled Temps

Wage growth for temps is likely limited to workers whose skills are in relatively short supply, said Kathryn Kobe, director of price, wage, and productivity analysis at Economic Consulting Services LLC in Washington. Nonetheless, the employment situation has started to improve enough to expect a pickup in overall wage gains by year end, she said.

Recent increases in the Wage Trend Indicator, an index created by Kobe and economist Joel Popkin for the Bureau of National Affairs, a private provider of economic data, indicate pay will climb.

The gauge points to about a 2 percent increase in the Employment Cost Index by the end of the year, which would be the biggest gain since the first quarter of 2009, according to BNA. Through the first quarter, the ECI, a broad measure of compensation, posted a 1.6 percent year-over-year gain, according to Labor Department data.

"We're seeing enough forward momentum in the economy that we're expecting to see modest wage and salary gains," Kobe said.

ADP's Clients

In another sign wage gains are broadening, funds held by Roseland, New Jersey-based Automatic Data Processing Inc. for its clients are rising, according to Rod Bourgeois, an analyst at Sanford C. Bernstein & Co. in New York, who maintains an "outperform" rating on the provider of payroll services to about 550,000 companies.

Average client balances, or the money ADP receives to pay wages to customer employees, increased 12 percent in the quarter ending March 31, Chief Executive Officer Gary Butler said in a May 2 statement. Such funds climbed to a record in April, breaking the previous high reached in March 2008, Butler said on a conference call the same day.

This is "resounding evidence" that salary gains are improving, said Bourgeois. While some of that growth may be attributed to a larger client base or other non-wage reasons, these are not large enough to account for all the gain, he said.

Bourgeois estimated that gains in salaries accounted for about half of the 12 percent increase in ADP's client funds.

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