State of the Labor Market

August Jobs Report Preview: Wage Growth in Middle-Wage Industries Picking Up

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Nominal wage growth has been bouncing around 2.7% since 2016, and the question remains when wage growth will begin accelerating again. Month-to-month volatility in wage growth numbers can make it difficult to spot the beginnings of an upward trend and any change in a wage growth trend is small enough to be difficult to see at the moment.

So how does wage growth break down for individual types of workers? We took a look at lower-, middle-, and high-wage industries to look at how wage growth is evolving in different industries. Lower-wage industries include, for example, food services and drinking places, employment services, and general merchandise stores. Middle-wage industries include nonresidential specialty trade contractors, food manufacturing, and real estate, while high-wage industries include hospitals, insurance carriers and related activities, and management of companies and enterprises.

 

Lower-wage industries had a sharper drop in wage growth than middle- and high-wage industries during the early years of the recession, but since 2016 workers in lower-wage industries have largely seen faster wage increases than those in middle- or high-wage industries. Lower-wage industry wage growth has been faster than high-wage industry wage growth since mid-2015, and than middle-wage industry wage growth since the beginning of 2014.

But this year, wage-growth in middle-wage industries has been picking up.  From 2016-2017, average wage growth in middle-wage industries was 2.5%, but has risen to 2.8% this year. Meanwhile, from 2016 to the present, lower-wage industry wage growth has largely bounced around 3.0% and high-wage industry wage growth around 2.6%.

So while wage growth overall isn’t seeing a clear upward trend yet, wage growth in middle-wage industries does look like it’s been speeding up this year. This Friday, we’ll be looking to see whether that trend continues.

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