Wages Remain Stagnant with No Relief in Sight

U.S. wage growth was meager in the second quarter across most industries and cities

By Stephen Miller, CEBS Jul 24, 2015
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The second quarter PayScale Index report, released in July 2015, showed the average 12-month increase in U.S. hourly wages across all industries was only 0.3 percent from April through June.

The index, which follows changes in total cash compensation for full-time, private-industry employees, predicts wage growth will remain low in the third quarter of 2015 as well.

“Unlike previous quarters where we observed some bright spots in wage growth for a subset of industries, metro areas or jobs, wages in Q2 [second quarter] 2015 were stagnant, if not down, across the board,” said Katie Bardaro, lead economist at PayScale, a pay consultancy.

PayScale predicts a 0.2 percent increase in U.S. wages for Q3 2015 compared to the previous quarter, based on a predictive model that incorporates the Consumer Price Index and U.S. unemployment rates over time.

Annual Trends in Compensation for National (US)
National (US)
National (US) Forecast

Among key findings in the Q2 report:

STEM-focused jobs continue to experience a slowdown. Wages for previously hot-performing science, technology, engineering and math-related (STEM) jobs fell for the second quarter in a row, with quarterly wage growth down for positions in IT (-0.4 percent), engineering (-0.1 percent), and science and biotech (-1.1 percent).

IT and engineering jobs are still near the top of the list for long-term wage growth. Since 2006, IT and engineering wages have risen 10.3 percent and 10.8 percent respectively.

Wages for the mining, oil and gas exploration industry largely recovered from their quarter one (Q1) dip. Annual wages for this industry fell 1.3 percent in Q1, but then grew 1.1 percent in Q2. Meanwhile, wages in Houston—a city dominated by the oil industry—dipped 0.9 percent in Q2, reflecting volatility resulting from low oil prices.

The arts, entertainment and recreation industry experienced the largest annual wage growth in Q2 at 1.5 percent. Wages in this industry are largely tied to consumer demand. The construction industry experienced the second highest annual wage growth at 1.4 percent. Meanwhile, the real estate industry saw annual wages increase 1.2 percent.

Wages in the retail industry still are reeling from decreases in retail spending earlier this year. Wages for this industry fell 0.6 percent in Q2 and only slightly rose by 0.2 percent for the year.

Wage Growth in Major Cities

The report also showed that U.S. metro wage growth was tepid, at best, across all major cities. The top three U.S. metro areas experiencing the most annual wage growth in Q2 were:

Tampa, Fla. (+1.5 percent).

Seattle (+1.0 percent).

Minneapolis (+0.6 percent).

The three U.S. metro areas experiencing the largest drop in annual wage growth, although their wage rates remained among the nation's highest, were:

New York City (-0.6 percent).

Washington, D.C., and Boston (both at -0.2 percent).

Canadian and U.K. Wage Rates

The index also tracks wage changes in Canada and the U.K. In Canada, only two metro areas showed quarterly wage growth in Q2: Ottawa at 0.8 percent and Vancouver at 0.1 percent.

Wage growth in Canadian oil cities suffered from low oil prices, similar to Houston. Wages in Edmonton were down 0.1 percent and dipped 0.7 percent in Calgary. However, Edmonton still dominates Canadian metropolitan areas for the most growth since 2006 at 23.4 percent.

Wages in the U.K. declined 0.3 percent in Q2 with annual wage growth up a paltry 0.1 percent. As of Q2, U.K. wages have grown by 7.9 percent since 2006, falling behind Canada (10.6 percent) and just ahead of the U.S. (7.8 percent).

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

Related News Article:

Quarterly Increase in U.S. Worker Pay Smallest on Record, Bloomberg Business, July 2015

Related SHRM Article:

Holding Steady, Expect Salary Budgets to Rise 3.1% in 2016, SHRM Online Compensation, July 2015

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