Post-Recession Wages Have Been Flat Except for in These Industries

Although the economy has recovered in many ways, it’s well known that post-recession wages have remained flat. In fact, a new study by EMSI and CareerBuilder shows that adjusted earnings among wage-and-salary employees have decreased 0.1% since 2010. Even compared to pre-recession earnings, there hasn’t been much progress (2.1% since 2005)—a trend that could stall economic growth if people are less willing to spend money on goods and services.

See the chart below for details. Note that average earnings have been adjusted at 2015 dollars but do not include supplements, such as employer contributions to 401K plans, pensions, etc.

There is some good news. The study identified sectors where wages are picking up. At the broad industry level, these include information (13.9% increase in average earnings between 2010 and 2015), real estate and rental and leasing (7.4%), and finance and insurance (4.2%). In contrast, other broad industries have seen wages decline, especially health care and social assistance (-4.4% between 2010 and 2015) and government (-3.1%).

This information could help a variety of stakeholders make better decisions:

• Education institutions and workforce boards can connect jobseekers with in-demand industries with growing earnings.
• Economic developers can prioritize retention and attraction efforts with a focus on the industries that substantially contribute to regional prosperity.
• Businesses can gain a stronger understanding of the competitive recruiting landscape.

A few takeaways from the study are below.

Wage Increases or Decreases Often Coincide With Industry Shifts

Within broad industry sectors, which detailed industries are driving changes in average earnings? It turns out that significant changes in wages—whether up or down—frequently occur when industries undergo other shifts, such as drastic fluctuations in the number of jobs. The outliers in the chart below indicate examples of this trend.

You can view related industries by selecting broad industry sectors from the drop-down menu.

While there is a high volume of industries that have undergone slight changes in wage or job counts, the outliers reveal extreme shifts.

The most radical outlier is the other information services industry, which saw a 65% increase in the number of jobs between 2010 and 2015 as well as a 71% increase in earnings. This industry is primarily engaged in operating news syndicates, where information is provided in news reports, articles, pictures, and features. It also includes libraries and archives, Internet publishing and broadcasting and web search portals, and all other information services.Other outlier industries include other investment pools and funds (-92% jobs decline, 31% average earnings increase) and forest nurseries and gathering of forest products (-28% jobs decline, 28.5% average earnings increase).

Does Wage Growth Mean an Industry or Occupation is in Demand?

Increases in average earnings can signal that companies are trying harder to recruit workers. But if that’s an indication of demand, why have a good number of industries with decreases in jobs between 2010 and 2015 also seen average earnings rise? Here are a few answers to this question:

• It’s possible that jobs are decreasing because businesses can’t find qualified workers to fill them, causing earnings to go up as demand rises.
• This could be the result of layoffs among low-skill workers, causing higher-skill, higher-paid positions to have more influence on average earnings calculations. An example of this trend would be in advanced manufacturing industries, where many lower-skill jobs have been automated.
• This trend could also be a result of NAICS reclassification. A shift in what is classified in each industry group could alter both job counts and earnings information.

Diving Into an Example

Let’s dive into an industry example to understand what causes shifts in average earnings. We chose the data processing, hosting, and related services industry because, although it’s shown growth in both earnings (6%) and jobs (20%) over the last five years, it’s not one of the extreme cases.

At the same time, this industry is part of the broad information sector, which is seeing the steepest earnings increases in the country. So we’re hoping this example will shine light on similar cases as well.

Staffing Patterns

Staffing patterns, which map industries to the occupations employed within them, can add insight to what might be causing changes in earnings over time.

The table below shows the occupations with the most job growth in the data processing, hosting, and related services industry between 2010 and 2015. Only occupations that make up at least 3% of the industry—enough to significantly influence average earnings—are listed. Although, median hourly wages correspond to occupations across industries, not just in data processing and hosting.

The above table shows that, of the occupations that make up the greatest share of the industry, those that are growing the fastest pay very well—a trend that may have something to do with increases in average earnings:

• Software developers, systems software ($49.46 median hourly earnings, 23% growth in this industry)
• Software developers, applications ($45.92 per hour, 22% growth)
• Computer systems analysts ($39.76 per hour, 21% growth)

Where is it Growing?

Because wages vary from place to place, the location of job growth can also influence average earnings. And knowing where industries with increases in average earnings are located can also be extremely powerful when making decisions about education and training programs, site selection, or business attraction and retention.

Here is a quick breakdown of the data processing, hosting, and related services industry in states with an above-average concentration of these jobs:

While some states with high earnings in the industry—such as Colorado ($103,148 average earnings) and North Carolina ($95,478 average earnings)—saw massive growth, the states that are losing jobs in this industry are on the mid- and lower-end of the pay scale. The most surprising of the declines is in Utah, where there are well-known tech hotspots in Salt Lake City and Provo.

Learn more about EMSI data

To read more about our earnings study, click here. Follow EMSI on Twitter (@DesktopEcon) or check us out on LinkedIn and Facebook.

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