Job Market and Wages Continue to be Weak

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unemployment-office-150x150Slow wage growth is one of the side effects of a weak labor market. Even though the official unemployment rate has fallen to 5.5 percent in the nation in February, the rate that includes people working part time who would rather work full time and the marginally attached is 11.0 percent.

With plenty of jobseekers to choose from, firms have been stingy with wage increases. From 2009 (the year the recession ended) through 2014, annual average wages in the Richmond metro area rose 1.7 percent. That’s slightly better than the 1.6 percent in the state but not as good as the 2.2 percent growth in the nation. Over that same period, inflation rose an average 2.0 percent a year. From that perspective, the purchasing power of consumers in Virginia fell over that period and barely rose in the nation. That may partially explain why retail sales have not been as strong as many observers expected with the declines in gasoline prices.

Wage gains in some industries have kept pace with inflation. Annual average wages in the finance and insurance industry rose a respectable 5.4 percent over the last five years in the metro area followed by an average 4.6 percent for mining and quarrying and 3.3 percent for real estate. In contrast, arts and entertainment wages grew an annual average 0.7 percent in the metro area and the state to make it one of the slowest growing over the period.


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