Payscale released their Q3 2018 PayScale Index yesterday. The aim of the research is to identify and track quarterly and annual compensation trends (as well as forecast the next quarter).
The most recent Q3 Index showed wage growth across the U.S. was generally flat. Currently, the U.S. economy is experiencing record corporate profits, low unemployment rates and a booming stock market—economic indicators which typically drive wages upward. In addition to stagnant nominal wage growth, real wages for Q3 were down 1.8% from Q3 2017 which means the average person can purchase even less than they could last year when wages are measured in relation to inflation.
“While key economic measures point to a robust economy, there is no question that these economic improvements have not translated into robust wage growth for the average worker,” said Katie Bardaro, Chief Economist at PayScale. “While it’s encouraging to see that wages are not continuing to drop—as the Index reflected in Q2—it is apparent the positive performance of many companies is not resulting in an increase in most employee’s pay checks.”
Wages were generally flat or down across the board:
- After a less-than-stellar Q2 when nominal wages declined, wages fell by 0.1% over the last quarter and grew a mere 0.4% year over year.
- Real wages were down 1.8% since last year.
- Blue collar wages were hit hardest as wages fell for transportation; manufacturing & production; and installation, maintenance & repair jobs. Transportation jobs experienced the largest decline with wages falling 3.8% in one year.
- A bright spot in the economy was marketing and advertising jobs which increased by 3.5% since last year.
Slow Wage Growth in U.S. Metro Areas:
- Austin experienced a difficult Q3 with the lowest annual wage growth of all the metro areas included in the analysis. Wages fell 1.4% over the last year.
- San Francisco experienced the largest increase in wages with grew 2.7% since last year.
- For the first time, the Raleigh-Durham-Chapel Hill, NC area was included in the Index. Employees in the Research Triangle experienced 1.2% wage growth over the last year.
Canadian wages fare slightly better than the U.S.
- Wages in Canada grew by 1.3% over the last year.
- Annual wage growth was up 2.1% in Vancouver; 2.0% in Toronto and 0.8% in Calgary. Annual wage growth was down 0.1% Edmonton; perhaps slowed following a ruling that halted the Trans Mountains pipeline project.
The PayScale Index is a different economic measure than the Employment Cost Index (ECI) reported by the Bureau of Labor Statistics (BLS). While the ECI tracks employment costs within organizations, the PayScale Index tracks workers’ wages across various organizations. This means the PayScale Index will capture changes in employees’ wages when they are move to a different company, while the ECI does not. There is value in using both the ECI and the PayScale Index to determine relative wage growth in the U.S. economy.
To view the entire interactive Q3 2018 PayScale index which reflects wage trends across various industries, job categories, company sizes and major metros, including Canada, please visit: https://www.payscale.com/payscale-index