Personal finance

U.S. wage growth is cooling, but some jobs are still seeing relatively big annual raises

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Wage growth has cooled from its scorching pandemic-era pace. But there are still pockets of heat.

Workers are getting relatively big annual raises in occupations like legal, dental, child care, cleaning and sanitation, and medical information, for example, according to a new analysis by job site Indeed.

Nationally, wages grew at 3.1% a year in March, well below the recent 9.3% peak in January 2022, according to Indeed, which tracks average pay advertised in its online job listings.

However, there’s “massive variation across industries,” according to Julia Pollak, chief economist at career site ZipRecruiter.

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At a high level, wage growth is above average in 47% of job sectors, according to the Indeed analysis.

Among them, it’s highest in the legal profession: Indeed found that average workers saw their paychecks grow at a 5.7% pace in March 2024 versus a year earlier. That’s down just 0.1 percentage points from six months ago.

The analysis found that the dental and childcare sectors ranked just behind, each at 4.8% annual growth; medical information and cleaning and sanitation jobs placed just behind, both at 3.9%.

By comparison, software developers have seen the lowest annual growth since March 2023, at 0.4%. That’s down from a recent 9% peak in April 2022.

Strong wage growth doesn’t necessarily translate to a high salary, though.

“I don’t think someone will leave their software development job to work in childcare because wage growth is higher,” said Allison Shrivastava, a labor economist and author of the Indeed report. “But if you were working in [similar-paying jobs like] retail or food prep and you wanted higher wages, that might be worth looking at,” she said.

The average childcare worker earns $15.42 an hour and $32,070 a year, according to the U.S. Bureau of Labor Statistics. By comparison, software developers make $66.40 an hour and $138,110 annually, according to BLS data. Dentists make about $96.57 an hour and $200,870 a year, on average.

Wage growth surged in 2021 and into 2022 as employers had to “roll out the red carpet” for workers at a time when labor was scarce and workers were “demanding to be made whole for inflation,” Pollak said.

She said it also “peaked at different times for different industries” during the Covid-19 pandemic due to a “complex web” of factors like labor supply and demand.

Some roles, such as face-to-face jobs in food services, became less attractive overnight after the pandemic led to a big shift in remote work. Turnover rose more quickly among in-person occupations than remote ones, Pollak said.

For example, workers in accommodation and food services saw annual earnings growth peak at 16.1% in December 2021, according to ZipRecruiter data. By comparison, it found that those in the information sector saw growth peak at 7.8% in September 2022.

Current national wage growth is in line with the 2019 pre-pandemic average, indicating a labor market that is widely viewed as healthy.

While the average worker enjoyed historically rapid wage growth in the recent past, their pay wasn’t keeping pace with inflation. As inflation has fallen, buying power has risen again on average.

Shrivastava of Indeed said the job market “has cooled down from a really, really feverish pace.” However, she said, it has cooled to a place that “seems more sustainable” for workers and businesses.

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