High Times II: High Wage Industries Show High Wage Growth

Monday, December 10, 2018

Last month, we examined the growth in employment of high, middle, and low wage industries in a blog article based on local analysis of a USA Today article. While high-wage industries grew more than others from 2017Q1-2018Q1, have wages in these industries increased, as well?

We found that wage growth follows a different pattern than employment growth with recent wage gains in low-wage industries, but longer-term wage gains in high-wage industries.

Recent changes

To analyze wage growth, we did two things differently:

  • We base the analysis on Average Weekly Wage.  The industries themselves will remain in the same categories, even if the category demarcation points will not be as rounded ($35,000/52=$673.08/week, $65,000/52=$1,250/week).
  • We inflation-adjust wages to 2018Q1 $ based on the Consumer Price Index (CPI).

To understand change between high-, middle-, and low-wage industries, below is a chart with industry, 2017Q1 average weekly wage, 2018Q1 average weekly wage, and its category:

NAICS Code

Industry

2017Q1 Average Weekly Wage*

2018Q1 Average Weekly Wage

% Difference

Wage Level

55

Management of Companies

$2,885

$2,858

-0.9%

High

52

Finance & Insurance

$2,518

$2,609

3.6%

High

22

Utilities

$2,232

$2,202

-1.4%

High

51

Information

$1,787

$1,822

2.0%

High

54

Professional, Scientific, & Technical Services

$1,565

$1,563

-0.1%

High

42

Wholesale Trade

$1,489

$1,487

-0.1%

High

21

Mining

$1,418

$1,233

-13.0%

Middle

31

Manufacturing

$1,212

$1,219

0.6%

Middle

53

Real Estate & Rental and Leasing

$999

$1,012

1.3%

Middle

23

Construction

$1,001

$1,000

-0.1%

Middle

48

Transportation & Warehousing

$950

$986

3.7%

Middle

62

Health Care & Social Assistance

$950

$956

0.7%

Middle

92

Public Administration

$942

$937

-0.5%

Middle

61

Educational Services

$856

$869

1.5%

Middle

56

Administrative & Support

$709

$712

0.4%

Middle

11

Agriculture, Forestry, Fishing & Hunting

$684

$688

0.6%

Middle

81

Other Services (exc. Public Administration)

$663

$667

0.6%

Low

71

Arts, Entertainment, & Recreation

$632

$600

-5.0%

Low

44

Retail Trade

$551

$548

-0.7%

Low

72

Accommodation & Food Services

$332

$332

0.1%

Low

*In Inflation-Adjusted 2018Q1 dollars.
Source:Quarterly Census of Employment and Wages (QCEW)

*Mining not shown- but has -13% wage decline.  Source: QCEW

Over the previous year, while most high-wage industries generally had flat or declining wages, average wages went up in the category by 0.9% on the strength of wage growth in Finance & Insurance and Information.  Middle-wage industries generally had increasing wages, and average wages went up in the category by 0.8%.  Seven of the 10 middle-wage industries had wage growth, with only Mining, Public Administration, and Construction offering lower wages in 2018 than 2017.  Average wages across the low-wage industries declined by 0.7%.  We found mixed results amongst the low-wage industries: two (Accommodation & Food Services; Other Services) had higher wages while two (Arts, Entertainment, & Recreation; Retail Trade) had lower wages.

Are recent changes reflective of the larger pattern since the start of the recession or century?

Mostly- but accentuated even further.  High-wage industries generally saw clear percentage wage gains while middle-wage industries showed more modest wage gains and low-wage industries overall showed a modest decline.

NAICS Code Industry 2000Q1 Average Weekly Wage* % Diff. from 2000Q1 to 2018Q1 2008Q1 Average Weekly Wage* % Diff. from 2008Q1 to 2018Q1 2018Q1 Average Weekly Wage Wage Level
55 Management of Companies $1,717 66.4% $2,468 15.8% $2,858 High
52 Finance & Insurance $1,663 56.9% $2,104 24.0% $2,609 High
22 Utilities $1,856 18.6% $1,880 17.1% $2,202 High
51 Information $1,031 76.7% $1,438 26.7% $1,822 High
54 Professional, Scientific, & Technical Services $1,250 25.0% $1,318 18.6% $1,563 High
42 Wholesale Trade $1,167 27.4% $1,294 14.9% $1,487 High
21 Mining -- -- $1,276 -3.3% $1,233 Middle
31 Manufacturing $1,051 15.9% $1,129 8.0% $1,219 Middle
53 Real Estate & Rental and Leasing $748 35.3% $836 21.1% $1,012 Middle
23 Construction $803 24.5% $850 17.6% $1,000 Middle
48 Transportation & Warehousing $977 0.9% $919 7.2% $986 Middle
62 Health Care & Social Assistance $821 16.4% $850 12.4% $956 Middle
92 Public Administration $869 7.9% $918 2.1% $937 Middle
61 Educational Services $806 7.8% $844 2.9% $869 Middle
56 Administrative & Support  $527 35.0% $624 14.0% $712 Middle
11 Agriculture, Forestry, Fishing & Hunting $602 14.2% $648 6.3% $688 Middle
81 Other Services (exc. Public Administration) $581 14.9% $571 16.9% $667 Low
71 Arts, Entertainment, & Recreation $652 -7.9% $669 -10.2% $600 Low
44 Retail Trade $566 -3.2% $542 1.0% $548 Low
72 Accommodation & Food Services $317 4.8% $308 8.1% $332 Low
 Source: Quarterly Census of Employment and Wages (QCEW)

*In Inflation-Adjusted 2018Q1 dollars.  Source: QCEW

When comparing recent wages with wages from 2000, we see only one industry among the high-wage industries that has gained less than 20%.  Meanwhile, none of the low-wage industries show even a 15% gain.  Likewise, comparing recent wages with 2008, most of the low-wage industries have not gained even 15%.  In contrast, few of the middle-wage and almost all high-wage industries have gained at least 15% in wages.  The chart above clearly shows how the general average wage measures within each category differ.  High-wage industries (+40.3%) show higher wage growth than middle-wage industries (+10.5%). Middle-wage industries show higher average wage growth than low-wage industries, which are declining (-2.6%).

What does this mean?

These findings reinforce some of the changes we’ve shown in wages.  For instance, when looking at firms rather than industries as the unit of analysis, high-paying firms show greater wage growth than lower paying firms.  

The short-term growth in wages for middle-wage and even some low wage industries may be at least partly due to a tight labor market.  Firms will offer higher wages as enticements for employment when they can’t find workers.  For instance, Transportation/Warehousing sees wage growth across many of its sectors, like Air Transportation, Truck Transportation, Support Activities, and Warehousing & Storage, though this is making up for lost ground from industry wages from 2000.  Another story of note from middle-wage industries is that legislation in the past few years may have influenced wage growth in Educational Services, in addition to other factors like local supplements in higher-paying urban markets.

The longer-term growth in wages appears to go to these higher-paying firms, particularly in Finance & Insurance and Information (which is driven in particular by Software Publishing).  These industries in North Carolina continue to grow and thrive, particularly in the Charlotte and the Triangle regions.