Real wages — the buying power of workers’ pay, once inflation is taken into account — grew 0.2 percent since last quarter, according to the recently released Q4 PayScale Index. However, real wages are 6.7 percent lower year-over-year than they were in 2006, before the Great Recession.
If that seems surprising, given soaring growth in the stock market last year, well, higher stock prices don’t necessarily equal higher pay.
“Although widely believed by political leaders that rising stock prices lead to higher wages, the two haven’t actually been correlated since prior to 1980,” said Katie Bardaro, Vice President of Data Analytics and Chief Economist at PayScale, in a statement. “So while the stock market is experiencing unprecedented growth, The PayScale Index has shown wages have barely kept pace with inflation for the typical full-time worker.”
“However, we are seeing higher wage growth for in-demand jobs as the tightening of the labor market continues and demand for these workers outpaces supply,” Bardaro continued. “Therefore wage growth is likely to continue for these roles, but many of the benefits of the stock market increase will be reaped by shareholders and executives vs. the average worker.”
Wage Growth Uneven Across the U.S.
Nominal wages grew 0.6 percent in Q4 2017 and 2.7 percent year-over-year for the country as a whole. But only a few metro areas saw year-over-year wage growth that outpaced inflation.
San Jose (home of Silicon Valley) and New York City tied for fastest year-over-year wage growth at 3.6 percent, followed by Pittsburgh, which rebounded from a dismal Q3 with 1.7 percent quarterly growth for a 3.5 percent increase year-over-year.
Other growing metros included:
- Milwaukee at 1.8 percent Y/Y
- Philadelphia at 1.8 percent Y/Y
- Phoenix at 1.5 percent Y/Y
Other cities showed negative quarter-over-quarter growth:
Portland: -0.8 percent Q/Q (2.5 percent Y/Y)
Miami: -0.4 percent Q/Q (2.0 percent Y/Y)
Kansas City: -0.3 percent Q/Q (2.1 percent Y/Y)
Philadelphia: -0.2 percent Q/Q (1.8 percent Y/Y)
Wages in Phoenix were flat for the quarter, and grew 1.5 percent year over year.
Hot Jobs and Growing Industries
Q4 2017 was a good time to work in Media and Publishing — at least from a wage growth perspective. Wages grew 1.6 percent Q/Q and 4.0 percent Y/Y in that job category. Manufacturing/Production and Transportation tied for the second spot, with 3.4 percent Y/Y growth.
On the industry side, Transportation and Warehousing and Real Estate tied for the top spot for year-over-year growth at 3.3 percent, followed by Non-Profits at 3.2 percent.
To see the entire interactive Q4 2017 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.
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