Wage growth is accelerating in several key industries,
foreshadowing stronger gains across the economy. Department of Labor figures
show pay hikes have picked up in sectors such as leisure and hospitality,
business services, construction and retail.
Despite monthly job growth that has surged well over 200,000
this year, average annual wage gains remain stuck at 2% — barely enough to keep
pace with inflation. Employers' failure to provide bigger raises has crimped
consumer spending, which makes up 70% of the economy.
But there are mounting signs that pay hikes are poised to
gain momentum in the second half of the year. Wages in leisure and hospitality
were up 2.7% in June from a year ago, vs. a 0.6% annual increase in June 2013. Hotels
have benefited from a surge in both business and vacation travelers, pushing
occupancy rates to pre-recession levels.
Other sectors lifting pay include:
• Salaries for professional and business services — a
category that includes architects, engineers and accountants — were up 2.4% in
June from a year ago, vs. a 1.6% annual rise in June 2013.
• Annual construction industry raises averaged 2.2% in June,
vs. 1.6% a year ago. Thousands of construction workers left the industry after
the mid-2000s real estate crash, leaving a shortage in many areas as housing
• In retail, annual raises averaged 2.2% last month, up from
1.8% a year ago. As in other industries boosting pay, retail unemployment has
fallen sharply the past year — to 5.9% from 7.3% for the sector.
Wage growth often lags a decline in unemployment by a year,
so bigger gains lie ahead. Annual raises for the top 20% of sectors with the
highest pay averaged 3% in May, nearly double the year-ago rate and economists
hope it continues.
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