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Wage Growth Stays Tepid as Demand Heats Up

National  + Weekender  | 

From a high-altitude view, the current employment picture ought to be conducive to steady wage growth. Unemployment is at historic lows, consumer spending remains robust, and both large and small businesses are having difficulty filling vacancies with qualified candidates.

Yet, from that same high-level perch, wage growth is proceeding by inches rather than leaps and bounds. In fact, July wage growth was actually negative when adjusted for inflation.

To gain some insight into this conundrum, Bloomberg News interviewed employers in three sectors where wages have remained persistently low despite shortages of workers: trucking, construction and child care. The high-level view of economic drivers becomes more nuanced when taking a closer look at specific industries.

In the trucking industry, there’s been a chronic issue of high turnover for some time—greater than 100% in some years. To help address that, recruiter Rob Hatchett with Covenant Transportation Services has raised weekly starting salaries from $450 to $600 and boosted wages overall by 10%.

The result has been the trucking firm’s best hiring numbers since Hatchett joined Covenant in 2012. “We’ve finally raised pay enough that we are beating our competition right now, beating the economy as a whole,” he told Bloomberg. “I’m loving life.”

Jacking up wages hasn’t been a solution for the construction sector, though. In Atlanta, homebuilders could put up 30,000 homes this year if only there were enough qualified workers to build them. Yet, despite free training programs and an 8.8% year-over-year rise in metro-area employment, the construction industry has been holding the line on wage increases.

Partly that’s due to the nature of the homebuilding business, where subcontractors compete partly on price, thereby limiting their leeway in boosting salaries. There’s also the concern that higher wages would primarily attract unskilled workers when skilled laborers are called for.

“Construction work is not easy,” Jim Brown, VP of the Home Builders Association of Georgia, told Bloomberg. “Most people won’t work that hard.”

Another labor-intensive sector is child care. In order to meet the guidelines of the National Association for the Education of Young Children, operators must adhere to a ratio of one worker to every three children.

“By definition, high-quality child care is not efficient,” the Center for American Progress’ Katie Hamm told Bloomberg. “We haven’t seen the wage growth we need to see because it’s essentially a broken market.” And, with wages averaging $23,760 per year, it’s a market with high turnover as workers go after better-paying opportunities.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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