Even at record low unemployment, wages remain largely stagnant

Dive Brief:

Despite record low unemployment rates, most industries are experiencing only mild wage growth, according to the Q3 2019 PayScale Index. The index found wages grew 0.5% quarter over quarter and 2.6% year over year.
Tech hub cities, transportation jobs and the arts and entertainment industry are "select bright spots in the economy," Payscale said. Among tech-heavy cities, San Francisco showed the highest wage growth at 4.3% Jobs in the transportation sector saw almost 5% wage growth. Conversely, manufacturing wage growth was relatively low, as was that of the energy and utility sector.
As the economy "loses some of its spark," Sudarshan Sampath, director of research at PayScale, said in a press release that the organization expects wage growth to remain at its steady rate in the coming months.

Dive Insight:

As salary is typically one of the largest line items in an organization’s budget, most employers are holding steady on modest wage increases for staffers, despite talent gaps and skills shortages, a recent Willis Towers Watson report noted. Many are looking at other perks and benefits to attract talent as annual increases remain the same.

"Despite an extremely tight labor market, most employers are either not willing or fiscally unable to increase their fixed costs across-the-board by bolstering their salary budgets," Catherine Hartmann, WTW's North America rewards leader, said in the report.

Experts also previously told HR Dive that large businesses struggle to raise base wages because of the wider impact of those fixed wages compared to variable wages for good performance. Smaller businesses, on the other hand, have more leeway to make shifts. Anxiety about economic shifts also has kept some from making major investments in pay. Various sources have predicted since early this year that the economy may tighten or even enter recession; while only 4.3% of economists surveyed by The Wall Street Journal earlier this year believe recession will begin in 2019, nearly half believe it may occur by 2020.

In some industries, however, talent shortages are driving up wages, even for interns. The tech industry, as noted by the PayScale index, continues to see wage growth as demand for those professionals continues to rise. Likewise, retailers have had to increase wages to compete in the holiday hiring market.