Recent data from the Labor Department shows wage growth in several sectors, including construction, retail, and leisure and hospitality. Together with three months of job reports in the 200,000-plus range, could these statistics mean that the economy is headed in the right direction, at last?
(Photo Credit: AaronPatterson/Flickr)
“There is evidence that a cyclical upturn in wage growth is underway,” says economist Paul Dales of Capital Economics, in an interview with USA Today.
Industries that saw a year-over-year improvement in wages include:
- Construction: 2.2 percent higher wages in June, 2014 vs. 1.6 percent higher wages in June, 2013.
- Professional and Business Services: 2.4 percent higher wages in June, 2014; 1.6 higher wages in June, 2013.
- Retail: 2.2 percent higher wages in June, 2014; 1.8 percent higher wages in June, 2013.
Paul Ashworth, Toronto-based chief U.S. economist at Capital Economics Ltd., crunched the numbers in Bloomberg Businessweek, determining that the 1.3 million private-sector jobs created so far in 2014 paid an average of $867 a week — $24 more per week than the $843 average per week earned by workers in jobs that existed prior to 2014.
“The upshot is that the jobs created this year have, on average, been of a slightly higher quality,” Ashworth says.
The main issue is whether wages will continue to improve, and outstrip the pace of inflation. Real wages are down 7.9 percent, compared with 2006 numbers, and The PayScale Index forecasts only a 0.3 percent increase for the third quarter, compared with the previous quarter, and a 1.9 percent year-over-year increase for Q3.
Tell Us What You Think
Do you think the economy is improving? We want to hear from you! Leave a comment or join the discussion on Twitter.