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Nominal pay rises 1%, but real wages still in red

January 09, 2019

Wage growth across the US slowed further in 2018, according to a fourth-quarter index of wages released today by PayScale Inc., a Seattle-based provider of compensation data and software.

Nominal wages rose 1.1% over the fourth quarter and increased 1.0% year over year. However, the modest uptick in nominal wages failed to bring real wages out of the red for the year. As a result, real wages fell by 1.3% since the end of 2017, which means the average person can purchase less than they could last year when wage growth was measured in relation to inflation.

Wages for most blue-collar jobs fell last year. Transportation and manufacturing jobs experienced the largest declines, with wages falling 3.9% and 2.4% since the end of 2017, respectively. Additionally, the energy and utilities, construction, and warehousing industries all experienced a decline in annual wages.

On the flip side, wages for marketing and advertising jobs increased 5.5% year over year in the fourth quarter, and wage growth in the technology sector increased by 2.7% over the last year. The real estate industry and the finance and insurance industry also experienced wage growth, with both sectors experiencing year-over-year wage growth of 2.4%.

San Francisco again experienced the largest increase in wages, up 4.9% since last year. San Jose and San Diego, Calif., were also near the top of the list of metros with annual wage growth of 3.3% and 3.0%, respectively.

In Canada, wages increased 1.9% nationally over the past year, faster than the 1.0% experienced in the US. Vancouver topped the Canadian list of metros with increased annual wage growth of 3.2%, while the oil city of Calgary posted the slowest wage growth at 0.6% in 2018.

“There is no question this is a turbulent period for the US economy, which means uncertain wage growth across many jobs and industries as well as a continual decline in real wages for most workers,” said Katie Bardaro, chief economist at PayScale. “Our most recent Index shows technology jobs — along with cities which have a heavy emphasis on technology — are some of the few, consistent winners when it comes to increasing wages in these volatile times.”

The PayScale Index tracks quarterly nominal changes in total cash compensation for full-time, private industry employees since 2007 (with a baseline of 2006).

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