Retail Workers' Gains Drive Long-Awaited Pickup in U.S. Wages
(Bloomberg) -- A long-awaited pickup in wage growth to accompany the robust U.S. labor market appears to be finally taking shape.
Average hourly earnings for production and nonsupervisory employees -- a group which comprises 82 percent of the private-sector workforce -- rose 2.8 percent in the year through May, the biggest advance of the expansion that began in mid-2009, according to Labor Department data published Friday.
The numbers look even stronger, and more like what you would expect based on employment trends, if you look past three sectors that have been gumming up the so-called Phillips curve relationship between unemployment and wage growth during this economic expansion.
Those three sectors -- financial activities, professional and business services, and education and health care services -- account for 43 percent of private production and nonsupervisory employees.
The financial sector didn’t really show a strong relationship with employment trends in the past, but the professional and business services and education and health care services sectors did.
The biggest driver of the acceleration in wage growth in the rest of the labor market over the last few months has been a surge in worker earnings at retailers. Construction and manufacturing have also contributed to the pickup.
Retail wage growth took a big hit in 2016 and 2017 due to fallout in that sector from the structural shift toward online shopping. If the strong gains hold, it will mark a return to levels of wage growth more consistent with the current levels of overall employment in the U.S. economy.
But it’s not all good news. Wage growth in the sector with the lowest average hourly wage -- leisure and hospitality, which is mainly restaurants and hotels -- continues to decelerate. So, while the wage data are looking pretty good, the two lowest-paying sectors in the U.S. job market -- leisure and hospitality and retail trade -- probably hold the key to whether the gains will stick going forward.
©2018 Bloomberg L.P.