The PayScale Index Shows Wage Growth Reached Three-Year High in Q3 2012

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Manufacturing jobs back to peak wage levels not seen since 2008; small companies best big companies in terms of annual wage growth.

PayScale, Inc. today announced The PayScale Index for Q3 2012, which tracks quarterly trends in compensation.

Q3 2012 proved to be another strong quarter for wage growth. Annual wage growth values are the highest they’ve been in more than three years and every measure of The PayScale Index experienced an annual growth in wages. Furthermore, for many measures, the quarterly wage growth in Q3 2012 was the highest it’s been since 2007.

“These strong wage trends coincide with recent large increases in the Dow Jones Industrial Average, which is almost back to its pre-recession peak and rising GDP (from $13.9 trillion in 2009 to $15.6 trillion in Q3 2012 in current dollars ),” said Katie Bardaro, lead economist, PayScale. “Additionally, the September Jobs Report showed falling unemployment, which brought the unemployment rate to a more than three-year low.”

Q3 2012 PayScale Index highlights include:

  •     There is no stopping the pay increases for jobs related to energy or technology, particularly highly skilled ones, as they experienced annual wage growth north of 3 percent and, in some cases, north of 4 percent.
  •     Jobs, industries and cities with strong ties to technology have once again done well this past quarter:

o    Among job categories, quarterly wage growth in Q3 was the highest for IT jobs: 2.1 percent.
o    Similarly, quarterly growth for wages in both the professional, scientific, & tech services and the information, media & telecommunications (which contains software development) industries were tops across the set of industries (both 1.7 percent compared to overall U.S. at 1.2 percent).
o    Seattle, San Francisco and Boston, three metros known for their strong tech presence, experienced annual wage growth of above 3 percent. In fact, San Francisco had its strongest quarterly wage growth since being measured by The PayScale Index (3.6 percent).

  •     Manufacturing activity expanded for the first time since May, but wage growth was the best it’s been since being measured by The PayScale Index:

o    Quarterly wage growth for manufacturing jobs was #2 across all job categories for Q3 at 1.7 percent, while annual wage growth was #4 at 3.6 percent.

  •     Social service, food service and legal jobs fell to the bottom of the list. Even though annual wage growth was positive, it was far below the national average of 3 percent.
  •     Similar to last quarter, quarterly wage growth for small companies outpaced large companies:

o    Wages in Q3 2012 grew by 1.5 percent for small companies compared to only 1.1 percent for large companies.
o    This strong quarterly growth pushed small companies to the top for annual wage growth (3.7 percent vs. 2.4 percent for medium companies and 2.9 percent for large companies)
Adds Bardaro: “In today’s economy, employers are not really ramping up hiring, but they want to continue to increase productivity. That means they need to incent their current workers to be more productive and ensure they don’t lose top performers. The key to achieving both of these goals are pay increases. Therefore, pay increases can occur without large employment increases.”

About The PayScale Index

The PayScale Index follows changes in total cash compensation for full-time, private industry employees in the United States and Canada. In addition to a US national index and a Canadian national index, it includes separate indices for the following:

  •     15 private industries in the U.S. as defined by the North American Industry Classification System (NAICS)
  •     20 largest U.S. metropolitan areas, as defined by the Office of Management and Budget (based on the July 1, 2009 population estimates by the United States Census Bureau).
  •     3 company sizes in the U.S.: small (under 100 employees), medium (between 100 and 1,500 employees) and large (greater than 1,500 employees).
  •     19 U.S. job categories, as defined, in part, by the Standard Occupational Classification (SOC) system.
  •     6 largest Canadian metropolitan areas, as defined by the Standard Geographical Classification (based on the July 1, 2010 population estimates by the Canadian Census).

The PayScale Index utilizes a unique approach to trend measurement. Unlike indices such as the Consumer Price Index, which measures the prices of certain goods and services (periodically updated to reflect changes in buying habits of Americans), The PayScale Index uses data on all private-sector, full-time employees working in a given time period.

PayScale has performed a detailed analysis of how various compensable factors, like work experience, education, employment setting and job responsibilities affect pay. This analysis is based on PayScale's extensive data of more than 35 million employee profiles, accounting for 250 compensable factors for more than 12,000 unique job titles, which show how the pay of actual workers varies with each of these factors.

About PayScale

Creator of the largest database of individual compensation profiles in the world, PayScale, Inc. provides an immediate and precise snapshot of current market salaries to employees and employers through its online tools and software. PayScale’s products are powered by innovative search and query algorithms that dynamically acquire, analyze and aggregate compensation information for millions of individuals in real time. Publisher of the quarterly PayScale Index(tm), PayScale's subscription software products for employers include PayScale MarketRate(tm) and PayScale Insight(tm). Among PayScale's 2,200 corporate customers are organizations small and large across industries including Zappos, Volunteers of America and Manpower. For more information, visit

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Steven Gottlieb
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