Is Employee Compensation on the Rise in your Job Market?
By: Lydia Dishman, PayScale.com
The times appear to be a’changing. And if paychecks are the indicator, the forecast for employee compensation is improving.
2011 saw wages rise, according to the most recent results from The PayScale Index, which follows employee compensation trends for full-time, private industry workers.
Only one industry, three cities and a handful of job categories experienced a decrease in pay over the last year, while the rest grew. This was the best performance of employee wages since the Great Recession began in late 2007.
Read on to find out if your business is keeping pace with an increasingly competitive recruiting landscape and employee compensation.
How to Track Employee Compensation
Katie Bardaro, PayScale’s lead anaylst, says the key is knowing whether you’re in step with what other employers are offering.
“The PayScale Index is following jobs, not employees,” who may have gotten raises as they developed new skills or added responsibilities, Bardaro explains. “This is a more efficient way to measure how the trend in pay has changed for any given job this year. The PayScale Index really focuses on the market price of labor,” she says.
Bardaro says that wage trends seen in the Index often correspond with unemployment figures.
“Unemployment goes down at a similar rate as the demand for labor goes up. The demand for jobs means the price of wages goes up, too,” she says.
While the Index is not a crystal ball says Bardaro, employers should take note of which salaries are trending up so they won’t fall behind and potentially lose out on attracting and retaining top employees.
Cities that Lead Salary Trends
Houston, Miami, and Chicago topped the Index in 2011 for cities with biggest improvement in wages. Bardaro says the findings indicate a cross relationship between the metro areas and the presence of industries that also experienced pay increases.
Earnings in Texas’ largest city finished up about 2.2 percent to beat the national average. That’s partly because Houston plays host to a diverse economic base.
Industries such as aeronautics, healthcare and energy have had a positive impact on wages. The high price of gas may pinch at the pump but Bardaro says, “Strong market prices in the oil and gas industry are the reason pay trends are increasing. As companies’ revenues go up so they have more money to hire and pay their staff more.”
Coming in at number two, Miami is a new leader with a 1.8 percent increase in wages due to position as an established transportation and tourism hub, two industries that rebounded towards the end of 2011.
Arts, entertainment and recreation experienced a serious slowdown during the recession and another drop early in 2011. Now, Bardaro says they appear more robust than ever. “Consumers are opening their wallets and traveling again,” she says.
Industries that Lead in Employee Compensation
Oil, gas and utilities experienced the biggest upward salary trends as market prices continued to rise on fuel for autos and homes.
However, Bardaro notes that manufacturing was the real winner in 2011, despite posting just a 1.3 percent increase.
She notes that the industry was in freefall during the recession and laid off thousands of workers. 2011 showed steady upward trend; Bardaro says manufacturing had its largest quarter-to-quarter growth since 2008.
Information, media and telecommunications also showed significant signs of life at the end of 2011. This indicates that pay models for online publishing have begun to generate revenues that could signal a return to pre-2008 pay levels sometime in the coming year.
Jobs at the Top
Those working in science and biotech jobs tied with workers in transportation for first place in The PayScale Index among job categories.
Though it’s a smaller category, it encompasses a variety of positions from physicists and biochemists to crime scene technicians and urban planners. As the economy eased, major corporations, think tanks, and research institutes were more willing to increase their spending to add staff.
Social service workers are among the top three segments of employees that saw pay increases. Bardaro explains that the social services industry has been doing pretty well over the last year. “There’s been a tremendous increase in demand which is common in tough economic times when people need support.”
Thanks to our aging population, the demand for healthcare practitioners at every level has been consistent. During the economic crisis, these workers only experienced a slight dip of 1 percent in earnings. Now wages are trending up again.
All of this is encouraging, says Bardaro, however the increases are still below that 3 percent standard that indicates a full recovery. “It will be exciting to see what happens in the next quarter, if these jobs break the barrier.”