By: Larry West, PayScale.com
Wages are on the rise in many key US industries, according to the newest release of The PayScale Index, a clear indication that competition for talented workers is heating up.
Although unemployment remains high and job growth is sluggish overall, savvy employers are looking closely at recent wage increases and employee compensation.
The question they’re asking: how can we position our company to recruit and hire top talent who can help us stay competitive in a volatile economy?
The answers, in part, can be found in recent labor data and correlating wage trends.
“The PayScale Index is a barometer for the labor market,” says Katie Bardaro, lead economist for PayScale.com. “When wages are up, it means companies are hiring and expanding. When wages are down, it means companies are laying off employees and eliminating jobs.”
Wages Show Dramatic Year-Over-Year Increase Nationwide
The PayScale Index, which PayScale.com publishes quarterly, tracks compensation trends over time for full-time, private-industry employees in the United States. During the second quarter (Q2) of 2012, wages nationwide were 1 percent higher than in the previous quarter and were up 2.3 percent year-over-year.
This represents the best annual improvement in employee earnings since Q1 2008, before the recession had a significant impact on the labor market.
Strong wage growth during the first half of 2012 has created new opportunities for workers and is motivating many employers to re-evaluate their compensation plans and starting salaries.
“Every organization struggles with deciding how to adjust compensation annually,” says Stacey Carroll, principal consultant at PayScale.com. “Organizations are always asking us, ‘what is the average pay increase this year?’
The truth is there’s no such thing as average. Decisions about how to reward employees are highly individual and should be based on what is in the best interest of each organization.”
Compensation Trends in Detail
In addition to reporting national trends, The PayScale Index also provides quarterly and year-over-year compensation information for 15 industries, 19 job categories, and the 20 largest US metropolitan areas as well as small, medium and large companies.
“Industries that performed well in the last year are those that are either experiencing large increases in revenue that they can invest in their employees, or growing due to increased consumer demand for their products and services,” Bardaro says.
“Employers need to be familiar with the wage trends in their industries if they want to stay ahead of the curve. If they don’t offer their top talent wage increases that either meet or beat the industry average, then they are likely to lose them to a firm that will.”
Which Industries Rank Highest in Wage Growth?
1. Mining, Oil & Gas Exploration
Mining, oil and gas exploration outpaced all other industries for wage growth in Q2 2012, with a 5.6 percent year-over-year increase, fueled by soaring oil and gasoline costs and peak prices of commodities such as gold and copper. While overall wages for workers nationwide rose roughly 5 percent between 2006 and Q4 2008, workers in this industry saw their wages increase by more than 10 percent in the same period -- that trend appears to be continuing in 2012.
Wages for utility workers ended the second quarter up 4.2 percent year over year -- their highest level since Q4 2007. Most utility workers are public employees, however, so the number of workers included in this industry category is relatively small (The PayScale Index only measures private-industry employees).
3. Professional, Scientific & Tech Services
Wages for the professional, scientific and tech services industry, which includes lawyers, accountants, IT consultants and other technology and service professionals, grew 1.7 percent in Q2 2012 and finished the quarter with 3 percent year-over-year growth.
Retail workers range from auto dealers to vending machine operators to the sales clerk at the mall. Retail industry wages are extremely sensitive to economic ups and downs. Year-over-year wage growth for the retail industry hit 2.7 percent by the end of Q2 2012 -- the highest since before the start of the recession.
5. (tie) Information, Media & Telecommunications AND Wholesale Trade
The strength of software and online publishing in 2012 was offset by the relative weakness of print publishing, which resulted in 2.6 percent year-over-year wage growth for the information, media and telecommunications industry as a whole in Q2. Wholesale trade tied information, media and telecommunications for fifth place on The PayScale Index industry ranking, with 2.6 percent year-over-year wage growth for Q2 2012.