Q: What’s happening to wage growth in the US in specific sectors?
A: We don’t really know. The hourly earnings data are available by sector each month, but the problem is that they don’t identify wage gains by occupation. So if you work in an trucking business, but your job is washing the windshields, you and your wages count in the truck transportation sector. Whether you’re a doctor or a hospital janitor, you’re both in the healthcare sector. This means the data are of little use when it comes to working out in real time where wage pressures are building (or fading) by occupation type. Moreover, the numbers are very volatile, because the samples are relatively small. In the truck transportation sector, for example, year-over-year wage growth reportedly slowed from 1.9% in June 2016 to just 0.3% in January 2017; it then rose to 4.6% in October 2017, before slowing to 3.7% in July this year, the latest observation. We would be very surprised if the underlying trends really were anything like that volatile, and we’d bet that wages now are rising faster than late last year, given the abundant anecdotal evidence. Yet that’s not what the official data show. In other words, we’re substantially in the dark about wage growth at all but the national level, especially in the short-term, where the noise in the sector (and regional) data is much greater than the signal.
Ian Shepherdson, Chief U.S. Economist
Pantheon Macroeconomics
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