Wages and salaries tend to be growing slowest in sectors gaining the most jobs, fastest in those gaining the least jobs

During the pre-recession period, real wages and salaries (measured in 2001 dollars) grew at an average annual rate of 1.0 percent in the goods-producing sector and 0.9 percent in the service sector. However, in the recovery period, this relative symmetry has eroded, says LaVaughn Henry, vice president and senior regional officer at the Cincinnati Branch of the Federal Reserve Bank of Cleveland.

According to Henry, the goods-producing sector, despite having the slowest rate of growth in employment levels, has seen an average of 1 percent growth in real wages and salaries. At the same time, the fast-growing service sector has seen wage and salary growth fall to approximately half that rate.

Henry says this is primarily due to the wide variance of jobs in the service sector.  Some service jobs in leisure and hospitality and wholesale and retail trade have much lower barriers to entry than the high-skilled, high-tech positions that are being created in the skilled manufacturing and construction sectors. As the demand for these high-skilled jobs continues to increase, average wages and salaries have grown at a faster rate than they have in the lower-skilled sectors.

Read Slow Recovery in Wages and Salaries Continues Despite Strong Jobs Growth

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.455.4479