Some Positive Income Growth Has Emerged in 2015

By Joseph Coombs Oct 2, 2015
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While the days of sizable annual salary increases are likely over, recent research from the Society for Human Resource Management (SHRM) shows that base pay has slowly improved for some members of the workforce in 2015.

In August, a net total of 16.7 percent of HR professionals in the manufacturing sector said their organizations increased pay for new hires, according to SHRM’s Leading Indicators of National Employment (LINE) report for September 2015.

Also in August, a net of nearly one in five (19.8 percent) service-sector HR professionals said their organizations bumped up their new-hire compensation. Those net totals represented four-year highs for the month of August for both sectors. It was the ninth straight month that a four-year high was reached in services, and the thirteenth out of the last 14 months that bar was reached in manufacturing.

Meanwhile, HR professionals expected base pay to rise in the second half of 2015 for a variety of job categories at their organizations, according to the newest Jobs Outlook Survey from SHRM, released Sept. 30, 2015.

More than one-third (35 percent) of those surveyed expected raises for salaried individual contributors/professionals and for managerial positions (34 percent) in 2015. Another 31 percent said base pay would rise for skilled labor positions, such as technicians and mechanics, and 30 percent said increases were anticipated for administrative/secretarial positions.

Concern over Stagnant Wages Still Justified

The U.S. Census Bureau’s latest income and poverty report did nothing to ease recent concerns about lackluster wage growth. Despite a steadily expanding economy and solid gains in jobs for the past several years, household incomes and poverty rates remained flat in 2014 compared with the previous year, the bureau found.

Among the findings from the report, titled Income and Poverty in the United States: 2014, is the fact that 2014 marked the fourth consecutive year in which the number of people in poverty was not “statistically different” from the previous year’s estimate. In 2014, there were 46.7 million people—14.8 percent of the population—living in poverty, according to census data.

Median household income in the U.S. last year was $53,657, marking the third consecutive year that the results were not statistically different from the previous year’s estimate. Real median household income—which is adjusted for inflation—was 6.5 percent lower in 2014 than in 2007 at the onset of the Great Recession, the Census Bureau found.

And according to an analysis by the Economic Policy Institute (EPI), a Washington, D.C.-based think tank, real earnings have budged little for men and women within the past 20 years. Adjusting for inflation and using 2014 dollars, EPI found that the median earnings for men working full time was $50,383 in 2014, very little changed from the median earnings of $48,596 in 1995.

The news wasn’t much better for women: The median earnings for full-time female workers was $39,621 in 2014, a marginal increase from the median of $34,711 in 1995. “The key driver of these income trends, besides lower employment and hours in the aftermath of the financial crisis, has been wage stagnation,” EPI’s report said.

The reasons for wage stagnation are numerous and, depending on whom you ask, they include:

  • A labor market that still has plenty of people out of work, thus lowering the competition for talent in some sectors and relieving the pressure on organizations to pay high wages. *Technological upgrades that have eliminated jobs and reduced market demand for workers in many fields.
  • Outsourcing of jobs overseas to countries where labor is much cheaper.
  • Organizations that are decreasing their focus on base pay and placing more emphasis on benefits as part of workers’ compensation packages.

Joseph Coombs is a senior analyst for workforce trends at SHRM.​

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