One of the disappointing data points in today’s employment report was the news that wages-as measured by average hourly earnings-fell .2% in December compared to November. Slow wage growth has been a continuing story with this economic recovery. Today’s blog post examines the average hourly earnings story in a little more detail.
Let us examine the wage story from two perspectives: month-over-month growth and year-over-year growth.
Here are the facts when examining the data from a month-over-month perspective. The data is sorted with the highest paying industry sectors first and the lowest paying industry sectors last.
|
November 2013 |
December 2014 |
Change |
|
| Utilities |
$35.97 |
$35.86 |
(.31%) |
| Information |
$34.39 |
$34.34 |
(.15%) |
| Finance |
$31.08 |
$31.02 |
(.19%) |
| Mining & Logging |
$30.93 |
$30.61 |
(1.03%) |
| Professional & Business Services |
$29.33 |
$29.27 |
(.20%) |
| Wholesale Trade |
$28.22 |
$28.17 |
(.18%) |
| Construction |
$26.90 |
($26.83 |
(.26%) |
| Durable Goods Mfg. |
$26.23 |
$26.19 |
(.15%) |
| Education & Health Service |
$24.97 |
$24.89 |
(.32%) |
| Transportation & Warehousing |
$22.90 |
$22.92 |
+.09% |
| Nondurable Goods Mfg. |
$22.70 |
$22.63 |
(.31%) |
| Retail Trade |
$17.11 |
$17.04 |
(.41%) |
| Leisure & Hospitality |
$14.08 |
$14.08 |
0% |
When we examine the data on a year-over-year basis, the story becomes clearer that wage growth has been uneven with some industries seeing nice wage growth while others see little wage growth. Keep in mind when looking at these growth numbers that year-over-year inflation is currently running at 1.4%. So, any growth numbers below 1.4% means that employees in that industry sector had negative real growth (i.e. growth after inflation). There are currently 6 out of the 13 industry sectors that are showing negative real wage growth.
|
December 2014 |
December 2014 |
Change |
|
| Utilities |
$35.51 |
$35.86 |
.99% |
| Information |
$33.43 |
$34.34 |
2.72% |
| Finance |
$30.37 |
$31.02 |
2.14% |
| Mining & Logging |
$30.59 |
$30.61 |
.07% |
| Professional & Business Services |
$28.78 |
$29.27 |
1.70% |
| Wholesale Trade |
$27.87 |
$28.17 |
1.08% |
| Construction |
26.35 |
($26.83 |
1.82% |
| Durable Goods Mfg. |
$26.01 |
$26.19 |
.69% |
| Education & Health Service |
$24.55 |
$24.89 |
1.38% |
| Transportation & Warehousing |
$22.71 |
$22.92 |
.92% |
| Nondurable Goods Mfg. |
$22.15 |
$22.63 |
2.17% |
| Retail Trade |
$16.66 |
$17.04 |
2.28% |
| Leisure & Hospitality |
$13.65 |
$14.08 |
3.15% |
Although jobs growth is showing solid progress, wage growth continues to lag. In order for economic growth to show stronger growth, wages need to see a stronger pace of growth.
Steve Scranton is the Chief Investment Officer and Economist for Washington Trust Bank and is a CFA charter holder with over 30 years of investment experience with equities, tax-exempt and taxable fixed income securities. Steve actively participates on committees within the bank to help design strategies and policies related to client and bank owned investments. Steve also serves as the economist for the Bank and has been a featured speaker for both client and professional organization events throughout the Northwest.
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