The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.
- BLS Handbook of Methods
- Bureau of Economic Analysis
- Bureau of Labor Statistics
- Congressional Budget Office
- Economic Data - FRED® II, St. Louis Fed
- Office of Management and Budget
- Statistics: Releases and Historical Data, Board of Governors
- U.S. Census Bureau Economic Programs
- White House Economic Statistics Briefing Room
February 17, 2016
Are Paychecks Picking Up the Pace?
From the minutes of the January 26–27 meeting of the Federal Open Market Committee, it's clear that many participants saw tightening labor market conditions during 2015:
In their comments on labor market conditions, participants cited strong employment gains, low levels of unemployment in their Districts, reports of shortages of workers in various industries, or firming in wage increases.
Based on the Atlanta Fed's Wage Growth Tracker (WGT), the median annual growth in hourly wage and salary earnings of continuously employed workers in 2015 was 3.1 percent—up from 2.5 percent in 2014 and 2.2 percent in 2013. That is, the typical wage growth of workers employed for at least 12 months appears to be trending higher.
However, wage growth by job type varies considerably. For example, the WGT for part-time workers has been unusually low since 2010. The following chart displays the WGT for workers currently employed in part-time and full-time jobs. For those in part-time jobs, the WGT was 1.9 percent in 2015, versus 3.3 percent for those in full-time jobs. The part-time/full-time wage growth gap has closed somewhat in the last couple of years but is still large relative to its size before the Great Recession. Note that full-time WGT is similar to the overall WGT because most workers captured in the WGT data work full-time (81 percent in 2015).
In addition to hours worked, median wage growth also tends to vary across occupation. The following chart plots the WGT for workers in low-skill jobs, versus those in mid- and high-skill jobs. (We define low-skill jobs as those in occupations related to food preparation and serving; building and grounds cleaning; and maintenance, protection, and personal care services.)
Notably, after lagging during most of the recovery, median wage growth in low-skill occupations increased 2.8 percent in 2015, versus 2.0 percent in 2014 and compared to 3.2 and 2.7 percent for other occupations in 2015 and 2014, respectively.
The improvement in wage growth for low-skill occupations seems mostly attributable to full-time workers; wage growth for people in low-skill jobs working part-time was about half that (1.6 percent versus 3.0 percent) of those working full-time (see the chart).
This pickup in low-skill wage growth fits with some anecdotal reports we've been hearing. Some of our contacts in the Southeast have reported increasing wage pressure for workers in lower-skill occupations within their businesses. One can also see evidence of growing tightness in the market for low-skill jobs in the help-wanted data. As the following chart shows, the ratio of unemployed to online job postings for low-skill jobs is always higher than for middle- and high-skill occupations. But the ratio for low-skill jobs is now well below its prerecession level, and the tightness has increased during the last two years.
The take-away? Wage growth for continuously employed workers appears to have picked up some steam in 2015, and the recent trend in wage growth is positive across a variety of job characteristics. Wage growth for people in lower-skill jobs has increased during the last couple of years, consistent with evidence of increasing tightness in the market for those types of jobs. The largest discrepancy in wage growth appears to be among part-time workers, whose median gain in hourly wages in 2015 still fell well short of those in full-time jobs.
- Do Higher Wages Mean Higher Standards of Living?
- Is There a Taylor Rule for All Seasons?
- Faster Wage Growth for the Lowest-Paid Workers
- Is Job Switching on the Decline?
- Private and Central Bank Digital Currencies
- New Evidence Points to Mounting Trade Policy Effects on U.S. Business Activity
- Digging into Older Americans’ Flat Participation Rate
- What the Wage Growth of Hourly Workers Is Telling Us
- Making Analysis of the Current Population Survey Easier
- Mapping the Financial Frontier at the Financial Markets Conference
- January 2020
- December 2019
- November 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- March 2019
- February 2019
- Business Cycles
- Business Inflation Expectations
- Capital and Investment
- Capital Markets
- Data Releases
- Economic conditions
- Economic Growth and Development
- Exchange Rates and the Dollar
- Fed Funds Futures
- Federal Debt and Deficits
- Federal Reserve and Monetary Policy
- Financial System
- Fiscal Policy
- Health Care
- Inflation Expectations
- Interest Rates
- Labor Markets
- Latin America/South America
- Monetary Policy
- Money Markets
- Real Estate
- Saving, Capital, and Investment
- Small Business
- Social Security
- This, That, and the Other
- Trade Deficit
- Wage Growth