In this regard, it seems that firms' wage-setting behavior has started to move in the direction of taking price rises into account. Surveys suggest that managers of small and medium-sized firms also appear to be raising wages based on a greater awareness of price rises than in the past.
It should be noted that, while corporate profits -- the source of wage increases -- have been at high levels on the whole, they vary across firms, depending on size and industry (Chart 14). It is also true that many managers of small and medium-sized firms say that, although their firm's performance has not improved, they have raised wages as a "defensive" step.