Money & The Economy

Wages increase during tightening labor market

Hourly wages increased again in September amid a tightening labor market.

The Trump economy is red hot and it is putting pressure on the job market as more jobs are created than there are people to fill them. The increased competition for workers sent wages up 2.33% ($.61) in  September.

The tight labor market continues to restrain job growth, while hourly earnings wage growth and weekly hours worked saw modest increases. At 99.18, the Small Business Jobs Index is consistent with last month’s level, but slowed 0.23 percent during the past quarter, and 0.75 since this time last year. The rate of hourly earnings growth in September stands at 2.33 percent ($0.61), increasing for the first time in more than a year. At 2.65 percent, weekly earnings growth has slowed during the past year. However, weekly hours worked are up year-over-year for the 22nd consecutive month.

“Small business hiring continues to stall; the Small Business Jobs Index dipped slightly again in September, from 99.22 to 99.18, its lowest since 2010. Demand, however, is now not the problem. The unemployment rate was 9.4 percent the last time the index was this low,” said James Diffley, chief regional economist at IHS Markit.

“Businesses are continuing to feel the impact of the tight labor market, and as a result, they are nudging wages higher in order to compete for top talent,” said Martin Mucci, Paychex president and CEO. “Our jobs index indicates slower growth among smaller businesses. Trends show a faster growth rate among larger firms, which suggests they have an edge in hiring right now.”

Broken down further by geography and industry, the September report showed:

  • The top regions for employment growth and wage growth, respectively, are the South and West.
  • Texas ranks highest among states for jobs growth; Arizona ranks first in wage growth.
  • Denver remains first among metros in jobs growth; Phoenix regained the lead in wage growth.
  • Leisure and Hospitality remains first among industries for hourly earnings growth.

The complete results for September, including interactive charts detailing all data at a national, regional, state, metro, and industry level, are available at HERE

National Jobs Index

  • At 99.18, the national index has slowed 0.23 percent during the past quarter and 0.75 percent during the past year.
  • The national index has fallen by 1.59 percent since its recent peak in February 2017.

National Wage Report

  • Hourly earnings growth posted its first uptick in over a year, increasing to 2.33 percent.
  • Weekly hours worked are up year-over-year for the 22nd consecutive month.
  • At 2.65 percent, weekly earnings growth has slowed during the past year.

Regional Jobs Index

  • Down in September and the most year-over-year, the Northeast and Midwest regions drove the September decline and have pulled the national index lower than the other regions during the past year.
  • Aided by a steady growth rate in the Pacific and strong improvement in the Mountain division, the West region climbed into second place and is the only region to increase its pace of employment growth in 2018.

Regional Wage Report 

  • At $28.08 an hour and 3.19 percent growth, the West continues to far outpace all other regions in hourly earnings growth.
  • Weekly earnings growth for the Northeast, South, and Midwest all ranged between 2.40 percent and 2.50 percent in September.

State Jobs Index

  • Led by a large gain in Dallas, Texas jumped to the top-ranked state with a 0.52 percent increase in September and an index of 100.70.
  • Also showing sluggish wage growth, employment growth in Virginia slowed 2.33 percent year-over-year to an index level of 98.46, an eight-year low.

Note: Analysis is provided for the 20 largest states based on U.S. population.

State Wage Report

  • At 4.05 percent, Arizona continues to lead state hourly earnings growth, with Tennessee and California trailing at 3.54 percent and 3.41 percent, respectively.
  • Florida and Georgia have had a strong pick-up in weekly hours worked in the second half of the year.
  • Texas, which leads employment growth among states, is struggling with wage growth, which is below 2 percent in September.

Note: Analysis is provided for the 20 largest states based on U.S. population.

Metropolitan Jobs Index 

  • At 101.40, employment growth in Denver increased 0.50 percent during the past quarter as it remained atop the metro rankings, just ahead of a surging Dallas metro.
  • Florida metros Tampa and Miami both had solid gains in September.
  • With its seventh-straight slowdown, at 97.57, the Philadelphia index dropped to the bottom of the metro rankings – its lowest level since 2011.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Metropolitan Wage Report

  • Hourly earnings growth in Houston and Dallas lags other metros, with both below 2 percent in September.
  • After averaging less than 3 percent in 2017, Denver hourly earnings growth has accelerated in 2018, reaching 3.94 percent in September.
  • Hourly earnings growth in the California metros of San Diego and San Francisco has decelerated to less than 3 percent.

Note: Analysis is provided for the 20 largest metro areas based on U.S. population.

Industry Jobs Index

  • Professional and Business Services had the weakest one-month growth rate, -0.23 percent, among industry sectors.
  • Relatively unchanged during the past quarter, Construction remains in second place among industries with an index just above 100.

Note: Analysis is provided for seven major industry sectors.

Industry Wage Report  

  • At 3.94 percent in September, Leisure and Hospitality remains ahead of other sectors for hourly earnings growth.
  • The highest-paying sectors, Professional and Business Services and Financial Activities, continue to see wage gains moderate. In September, both industries posted 2.24 percent hourly earnings growth.

Note: Analysis is provided for seven major industry sectors.

Carl Fox

Carl Fox is the senior money and finance writer for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.

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