Here’s more evidence of a cooling Southern California economy: One pay index shows local employers are trimming raises.
According to the U.S. Bureau of Labor Statistics’ employment cost index, Southern California wages and salaries in private industries rose at a 2.7 percent annual rate in the 12 months ended in June vs. 4 percent a year earlier.
Local increases did outstrip the national increase of 2.3 percent. And U.S. wage hikes were moderating, too: down from 2.5 percent for the 12-month period ending in June 2016.
It’s unclear why overall wage increases are stagnating when employers complain of worker shortages that typically forces companies to bid up salaries. And this wage index attempts to limit the impact of volatile pay in certain job categories.
So, how does this decrease in a typical wage raise in Los Angeles, Orange, Riverside, San Bernardino, and Ventura counties compare with other big job markets?
Well, nine of the large 15 metro areas tracked by the bureau’s index had bigger one-year wage gains. A year ago, Southern California raises were tops amongst this national sampling.
And only three of the 15 markets tracked suffered falling wages with Southern California’s 1.3 percentage-point drop in a year exceeded only by Detroit.
Miami had the biggest one-year wage gain of the 15 market tracked, up at a 3.9 percent annual rate. Seattle was next at 3.6 percent. Smallest? Philadelphia wages rose at a 2 percent annual rate.
Southern California’s signs of softer job growth and thinner raises began last year. Just look at another employment metric, this one taken from employer’s unemployment insurance filings by county.
Riverside County: The region’s biggest job growth, up 6.1 percent in 2016 up from 5.7 percent in 2015. But average annual pay slipped by 0.1 percent vs. a 6.7 percent jump in ’15.
Orange County: Next fastest biggest job growth, up 3.5 percent in 2016, off from 3.7 percent in 2015. Average annual pay was up only 0.1 percent vs. a 5.2 percent rise in ’15.
Los Angeles County: Job growth was 1.9 percent last year vs. 3.7 percent in 2015. Annual pay rose 2.1 percent vs. 2.2 percent in ’15.
San Bernardino County: Job growth was 2.8 percent last year vs. 3.2 percent in 2015. Annual pay was up 2.4 percent vs. 4.6 percent in ’15.
Are slimmer raises an early sign of employers pulling back … or is Southern California short of high-skilled workers who get the fat paychecks?