High Times: High Wage Industries Show High Growth

Friday, November 9, 2018
Author: 
Jeff Rosenthal

A few weeks ago, a USA Today article pointed out that high wage industries in the United States were growing more jobs in the past year than other jobs.  We decided to see if this was the case for North Carolina.

By-and-large, we found similar results for NC.  In fact, job growth in high-wage industries was even faster than the US.  And when we look at where NC is heading in the future, the rate of growth in high-wage industries is projected to continue to outpace those in middle and lower-wage sectors through 2026.

The national study from the newspaper article broke out industries into 3 groups:

  • Low wage (less than $35,000/year annual pay)

  • Middle wage (between $35,000 and $65,000/year)

  • High wage ($65,000 and above/year),

and found that from June 2017-August 2018, jobs in high wage industries grew 2% compared to 1.8% for both low and middle wage wages.

We used the most recent Quarterly Census of Employment and Wages (QCEW) data available across industries, took an annual comparison (2017Q1 and 2018Q1) and multiplied out the Average Weekly Wage measure by 52 weeks to get our own equivalent measures of low, middle, and high wage jobs.  To understand which industries were high, middle, and low wages, below is a chart with industry, 2018Q1 average weekly wage, and its annual estimated equivalent:

Source: Quarterly Census of Employment and Wages (QCEW) 2018Q1

We found a similar trend: jobs in high wage industries (2.7%) grew faster than jobs in low (1.5%) or middle (1.7%) wage industries.

Source: Quarterly Census of Employment and Wages (QCEW)

In our analyses, we wanted to see whether this snapshot of economic activity was different from the recent moving picture of the economy.  So, we looked at changes in employment in these groups since the start of the great recession (2008Q1) and the start of the century (2000Q1).  Our findings verified the ongoing trends of growth in both low and high wage industries with less growth in the middle.  In our state’s case, a large contributor of the smaller growth of jobs in middle wage industries is due to the huge decline of Manufacturing across the state since the 1990s.  Manufacturing alone declined more than 290,000 jobs from 2000Q1 to 2018Q1, and even more than 57,000 jobs from 2008Q1-2018Q1.

Will the future hold similar patterns?

Our recently released statewide 2017-2026 projections have employment for both industries and occupations.  When we keep the same categorizations as above, we see the following projected employment differences:

Source: NC Department of Commerce: 2017-2026 Employment Projections

We project employment in high wage industries to grow at a faster rate than employment in low and middle wage industries.  One large contributor to the high percentage growth rate is the growth in Professional, Scientific, and Technical Services, which alone is projected to grow 36,735 jobs at a percentage change of 15.3%.

By and large, it appears that the high wage industries in North Carolina will continue to grow at a faster pace than lower wage industries, even if there are still large numbers of jobs in lower wage industries.  As North Carolina continues to develop its Professional, Scientific, and Technical Services sector, and capitalizes on its historical strength in Finance & Insurance, this trend may continue into the future.