Wages shot up in Q2 2014, with 1% quarterly gains resulting in 1.8% year-over-year growth. Even though actual wage growth proved to be just below our forecasts from last quarter, wages are still up and our forecasts for Q3 2014 are very positive. PayScale predicts wage growth in Q3 2014 to be a slight uptick of 0.3 percent, resulting in annual wage growth of 1.9 percent.
But Real Wages Still Lag
However, when we incorporate inflation into the picture, we see a less rosy picture. PayScale incorporates the Consumer Price Index (CPI) into The PayScale Index, to produce the PayScale Real Wage Index
, which tracks the percentage change in real wages since 2006. This measures the buying power of the income for a typical full-time, private industry worker. With this added in, real wages are down just under 8 percent since 2006.
Winners and Losers
- The mining, oil and gas industry experienced an impressive 20.5 percent increase in wage growth since 2006. This industry has seen the highest total wage growth each quarter during the last eight years with an increasing lead on all other industries.
- Wage growth for both information technology and engineering jobs was 11.2 percent higher last quarter when compared to 2006. IT jobs showed a 2.6 percent annual gain in Q2.
- There are signs real estate may be recovering, as the industry saw the third best quarterly wage growth in Q2 of 2.1 percent. However, the major wage declines of 2013 mean the industry has only gained 7 percent since 2006.
- The accommodation and food service industry continues to struggle, as it experienced an annual drop in wages of 0.3 percent; the only negative growth for any industry in the Index. This industry also experienced the smallest wage growth since 2006 at only 4.2 percent.
- The top five metro areas experiencing the highest annual wage growth in Q2 are Houston (3.0 percent), Minneapolis (2.7 percent), Detroit (2.4 percent), Chicago, IL (2.4 percent) and Boston, MA (2.2 percent). Only Phoenix and Miami experienced decreases in annual wage growth at -0.1 percent and -0.6 percent respectively.
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Methodology for The PayScale Index: Trends in Compensation
The PayScale Index tracks quarterly changes in total cash compensation for full-time, private industry employees in the United States. In addition to a national index, it includes separate indices for specific industries, metropolitan areas, job categories, and company sizes. The PayScale Index uses 2006 average total cash compensation as a baseline.
See full methodology for compensation trend reports