2014 ended on a high note with quarterly wage growth of 0.6 percent and annual growth coming in at 1.8 percent. Not only did that exceed our predictions overall, but included some stellar results for individual metro areas, industries and job types.
Quarterly Wage Growth Doubled PayScale's Real Wage Forecast
Last quarter, the PayScale Index Forecast predicted quarterly growth of 0.3 percent, leading to annual growth nationwide of 1.3 percent. We are pleased to announce that wages surged and doubled our prediction. However, using our time series model that incorporates unemployment rates and the Consumer Price Index, we predict wage growth in Q1 2015 to stagnate at 0.0 percent, resulting in an annual wage growth of 1.7 percent.
Winners and Losers:
- Information technology jobs and architecture and engineering jobs are tied for the highest pay growth (11.5 percent) since 2006 despite relatively small quarterly wage growth in Q4 2014 (0.3 percent and 0.4 percent, respectively).
- Legal jobs saw the largest annual wage growth (at 3.8 percent). This is particularly notable, as the annual wage growth for legal jobs is the second highest it has been since the Index’s inception (topped only by their Q1 of 2013 annual growth of 4.9 percent).
- A slower quarter for the mining, oil and gas exploration can't displace years of consistent wage growth. Lower gas prices have dominated the news, and therefore it should be no surprise that in Q4 of 2014 the mining industry had the second lowest annual growth (0.9 percent). However, with total wage growth of 19.3 percent since 2006, the mining is in the lead as the number one industry for the highest wage growth since PayScale began tracking wages.
- Food service and accommodation is rapidly catching up to the rest of the pack. Though it still has the third smallest wage growth since 2006 (5.9 percent) of any industry, the restaurant industry saw an annual increase in wages in Q3 and Q4 of 2014 (1.7 percent in Q3 and 3.4 percent in Q4 of 2014).
- West coast cities continue to dominate wage growth, while the nation's capital is on a downslide. San Diego had the highest annual wage growth (3.7 percent), followed by tech hotspots San Francisco (3.6 percent) and Seattle came (2.8 percent). Houston retains the highest total wage growth since 2006 (14.4 percent) despite weak quarterly growth (0.2 percent).
- The Washington D.C. metro area, which includes Arlington and Alexandria, had the worst annual growth at 0.5 percent. This metro area only reports 8.1 percent growth since 2006, lower than national statistics (8.5 percent).
- Large companies are still on top with medium and small companies coming up fast. Annual wages in Q4 2014 rose by 2.4 percent for both large and small companies, while wages only rose by 1.8 percent for medium companies.
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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