Wage growth declined in Q2 2018 despite historically low unemployment

Today, PayScale Inc, the leader in precise, on-demand cloud compensation data and software for businesses and individuals, released the Q2 2018 PayScale Index, which tracks quarterly and annual trends in compensation and provides a U.S. wage forecast for the coming quarter.

The Q2 index showed wages declined 0.9 percent in comparison to Q1 2018. Meanwhile, real wages which measure wage growth in relation to inflation dropped 1.8 percent over the last quarter, the biggest decline in seven years. Due to the rapid rise of the Consumer Price Index (CPI) workers in Q2 2018 are earning 1.4 percent less in “real wages” than they did one year ago.

“The Q2 Index shows the benefits of recent changes to the tax policy are largely reaped by business owners, not employees. Many corporations are using the additional money to buy back stock rather than increase wages,” said Katie Bardaro, Vice President of Data Analytics and Chief Economist at PayScale. "However, there are a few exceptions. We are seeing higher wage growth for certain jobs as the tightening of the labor market continues and demand for certain talent outpaces supply. Therefore, our current strong economy disproportionately benefits employees that are in demand, in addition to shareholders and executives, while the average worker is left behind."

Here are the key findings from the Q2 2018 PayScale Index:

•  Wages were generally down across the board last quarter:

1. Wages fell in 80 percent of industries with 12 of the 15 industries experiencing a decline
2. Metros: 22 of the 31 metro areas showed wage decline
3. Job Categories: 13 of the 19 job categories also saw a decline in since last quarter

• With 4.2 percent annual growth, tech savvy San Jose tops the list of metro areas for highest wage growth, and by a large margin. Cleveland is a distant second with annual wage growth 1.6 percent lower.
• Wages in the tech industry held steady between in Q2, though they are still 2.1 percent higher than one year ago. With 14.5 percent growth since 2006, tech has seen the second largest wage gains since the great recession, trailing only the engineering and science industry.
• The largest decline in wage growth was in manufacturing and production jobs, which saw a 5 percent decrease since Q1. Construction jobs also took a big hit in Q2, as wages in that industry declined by 4.7 percent last quarter.
• The industry with the largest decline in wages was in the transportation & warehousing industry where wages fell 2.9 percent last quarter.
•  Accounting & finance positions (2.5 percent) along with art & design (2.4 percent) jobs posted the largest annual growth figures.
• Austin (2.3 percent), Orlando (1.7 percent) and Milwaukee (1.6 percent) had the largest decline in wage growth last quarter.

To view the entire interactive Q2 2018 PayScale index which reflects wage trends across various industries, job categories, company sizes and major metros, including Canada, please visit: https://www.payscale.com/payscale-index

About PayScale:

PayScale offers modern compensation software and real-time, data driven insights for employees and employers alike. More than 6,500 customers, from small businesses to Fortune 500 companies, use PayScale to power pay decisions for more than 16 million employees. These companies include T-Mobile, Macy's, Kayak, Sunsweet, UnitedHealth Group, Stihl, GoDaddy and Wendy's. For more information, please visit: https://www.payscale.com/ or follow PayScale on Twitter: https://twitter.com/payscale.