Following this morning’s news, and the better-than-expected news, on jobs numbers, I heard this story which had been filed yesterday. Today’s good news does not change the the reporter’s analysis. What really caught my attention was what this reporter stressed towards the very end:
“And, of course, the hourly wage numbers in the employment report are an average.” He goes on to explain some cities that vary from the average and some jobs that do.
This, has been the story all along. As my statistics professor used to stress, “look at the variance around the mean!” Read More Here
For college seniors entering the work force this year after graduation, there’s a lot to look forward to: high employment rate, higher salaries. The future is bright. Or is it? Others have a more pessimistic outlook. They paint a dimmer picture for this next generation: slow wage growth, and more inequality.
You might be left scratching your head with all the conflicting sources. Here’s what’s really going on: the data doesn’t lie, but it doesn’t give a full picture of what’s happening. That’s why compensation consultants are using more specific data, considering factors like industry, location, and demographic.
To read more of the positive, HERE or HERE or more of the negative HERE or HERE, but proceed with caution.
I am sure we sound like a broken record when it comes to AVERAGE wage growth. We’ve pointed out that as Baby Boomers retire at high salaries, and young people enter the labor market at low salaries, of course the average will be lower. We’ve worried that salary budgets of 3.0% meant to cover all range of employees – whether they are in “hot” geographical areas or possess scarce skills – leads to companies making poor merit increase decisions.
The Atlanta Fed has figured out a methodology of looking at wage growth that measures the growth of wages for those that stay in jobs, therefore measuring income growth for non-job changers. The Wage Growth Tracker is the time series of the median wage growth of matched individuals. This is not the same as growth in the median wage.
But Look at Charts 2 and 3. You may have learned in stats class that the median is important because it strips out the noise at the top and the bottom. But this time look at the noise! Follow the 25th and 75th percentiles in Chart 2 to see the tops and the bottoms. See that some workers are receiving 14% or 15% increases and ask yourself: do I have any employees that fit that profile? If I do – how can I address that? Then look at the 25th percentile and ask about what is happening with the negative increases? What competitive factors are driving that?
Lastly, drop to the bottom chart. That’s the percentage of workers receiving 0% increase. Another big why? Are companies diverting that small pool to the 14%? Is there a failure to invest in skills?
We do not have all the answers, but we hope we have framed the questions that folks should be asking. Read More Here