PayScale’s Q3 Index was released today! Nominal wages in the U.S. grew for the ninth consecutive quarter, with an increase of 0.7 percent since Q2 2017 and 2.8 percent since Q3 2016. After essentially flat quarter-over-quarter (Q/Q) growth in Q2, there was a non-negligible uptick of 0.5 percent in real wages in Q3, meaning that nominal wage growth outpaced inflation. Year-over-year (Y/Y) real wage growth was also positive at 1.1 percent. However, while this means that the typical worker’s purchasing power has increased, it remains below pre-Great Recession levels.
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Growth Not Uniform Across Regions
Good news for the Midwest: After a sluggish Q2, several Midwestern cities outpaced the national average in nominal wage growth: St. Louis (1.8 percent); Kansas City, MO/KS (1.2 percent); Detroit (1.1 percent) and Chicago (1.0 percent). Still, Detroit and Chicago remain below the national average in terms of Y/Y nominal growth.
Wages declined in three cities: Pittsburgh (-0.6 percent), Miami (-0.3 percent) and Washington, DC (-0.3 percent). San Diego also saw a slight fall at -0.1 percent. All four cities, however, posted positive Y/Y growth.
Portland had the highest Q/Q nominal wage growth at 2.1 percent. St. Louis and San Jose rounded out the top three with 1.8 percent and 1.5 percent, respectively. With its strong Q3 performance, St. Louis joins Seattle and San Francisco at the top of the ranking of cities by Y/Y growth. Each city has experienced a 4.1% increase in nominal wages since Q3 2016.
Real Estate, Retail and Business Services Sectors Falter; Finance and Energy Surge
After decent wage growth in Q2, real estate nominal wages were essentially stagnant in Q3 (0.1 percent), but are still 2.8 percent higher than last year. Nominal wages in retail and business also grew at a fair clip in Q2, only to more or less hold steady in Q3 (0.2 percent and 0.1 percent Q/Q, respectively). While both industries have seen more than 2 percent Y/Y growth (2.5 percent and 2.1 percent), their nominal wage growth is still below the national level.
Both the finance and energy industries saw lackluster nominal wage growth in Q2, but more considerable gains in Q3 (1.4 percent and 1.1 percent, respectively). This strong Q3 growth means that finance now greatly outpaces other sectors for Y/Y nominal wage growth (3.6 percent, versus a national average of 2.8 percent). Energy still lags with only 2.6 percent Y/Y growth.
In all other industries, wage growth was roughly on par with the national average.
Accounting and Legal Jobs Rebound While Others Lag
After negative growth in Q2, accounting and legal jobs saw a reasonable rebound in Q/Q nominal wage growth in Q3 (1.3 percent and 1.2 percent, respectively). Wage growth for accounting jobs Y/Y is on-par with the national average of 2.8 percent, while Y/Y wage growth for legal jobs is slightly higher at 3.0 percent.
Wages for sales and science/biotech jobs continue their steady climb, posting 1.0 and 0.9 percent growth Q/Q, respectively. This brings their Y/Y nominal growth rates to 3.5 and 3.6 percent, well above the national average.
While no occupation saw a decline in nominal wages, construction (0.3 percent), food services (0.3 percent) and media (0.2 percent) are well below the national average of 0.7 percent Q/Q growth. Wage growth for IT, media and architecture & engineering occupations are the lowest in terms of Y/Y growth at 2.0 percent each.
Wages in Canada continued to grow, though at a slower pace. Nominal wages increased 0.5 percent Q/Q in Q3, down from 0.7 percent in Q2, for a Y/Y increase of 2.6 percent. Ottawa (1.9 percent) far outpaced other Canadian cities in terms of Q/Q growth. Meanwhile, Calgary (-1.7 percent) and Edmonton (-1.4 percent) saw significant declines in wages. Nevertheless, Y/Y growth is still positive for all six major metropolitan areas.