The compensation gap among 15 of the largest U.S. markets is now at its widest point since 2016, Bloomberg reports, citing Bureau of Labor Statistics data. The agency also notes that private companies’ employment costs are rising more slowly, indicating the job market is cooling off. Where are paychecks getting fatter? Wage growth in Philadelphia’s metro area topped the list, with a 6.6% increase over last year, followed by the D.C. area with 5.7% growth and Miami with 5.5% growth. Houston, meanwhile, came in last for the third straight quarter, with 2.6% wage growth.
By Jake Perez, Editor at LinkedIn News
Pay gap between biggest US cities is getting wider as wages slow
WAGE growth is slowing down in the US economy as a whole – but not everywhere.
The gap between pay hikes across major American cities widened last quarter, according to data published on Friday (Jul 28) by the Bureau of Labor Statistics (BLS). The difference between the fastest and slowest increases in employment costs among 15 major metros rose to 4 percentage points, matching the highest figure of the pandemic period. It hasn’t been bigger since 2016.
Overall US employment costs for private industry rose in the second quarter at the slowest pace in two years, the BLS reported, reflecting a labour market that is gradually cooling.
In Philadelphia, though, the 6.6 per cent jump in employment costs from a year earlier was the biggest in data going back to 2006. At 5.7 per cent, the Washington metro area matched last quarter’s record high.
Meanwhile in Houston, pay increased just 2.6 per cent from last year. The city has ranked bottom among the 15 major cities for the past three quarters.
The second-lowest wage increases came in Minneapolis, at 4.1 per cent – but workers there are at least getting ahead of the cost of living. The city reported an inflation rate of just 1.8 per cent in May, the lowest for any major metro in the country. BLOOMBERG
Data released in early July show the U.S. economy may be cooling. Employers created 209,000 jobs in June, the smallest monthly gain of the past two and half years. The number of job openings in the U.S. slipped to 9.8 million, down from a peak of 12.0 million in March ’22. The labor market remains tight, however. June’s 3.6 percent unemployment rate is still below the 4.3 percent average in the five years leading up to the pandemic.
The Fed has been raising interestrates for over a year now, hoping to slow economic growth and cool inflation. The annual rate was 4.1 percent in May, much lower than the 8.9 percent experienced last June. However, it remains well above the Fed’s long-range target of 2.0 percent. The Fed is likely to raise rates when it meets again on July 26. Whether they continue after that depends on future economic reports.
While the nation continues to create jobs, growth is uneven. According to the Institute for Supply Management, the nation’s manufacturing sector contracted for the eighth consecutive month in June while the services sector expanded for the sixth consecutive month.