There’s a nice side effect from the Buffalo Niagara region’s slow but steady job growth.
Our wages are finally starting to rise in a meaningful way.
Not meaningful enough that local workers feel like they’re suddenly on Easy Street every time they open their paychecks.
But meaningful enough that they finally can start to feel like they’re actually doing a little better financially, after years of treading water.
And for that, you can thank the region’s modest job growth, which boosted employment by about 5,000 people last year, and helped sop up the excess labor that was thrown out of work during the recession.
With unemployment down to a nine-year low of 5 percent, we no longer have a labor market where employers can pay whatever they want to workers who are just thankful to have a job.
Now, workers are starting to have more choices about where they work and employers no longer have the pick of the litter when they go to hire. That means added leverage for workers with good jobs skills when the time comes to negotiate pay.
“It’s harder to find candidates to fill these new jobs ... and maybe even to retain your employees,” said Gary Keith, the regional economist for M&T Bank in Buffalo.
So far, employers are paying only a little more. If you adjust for inflation, real average annual wages per job wage rose by 3 percent last year and have increased by 4.5 percent since 2012 to $45,239, according to new data from the U.S. Bureau of Labor Statistics.
That may not sound like a lot – and the increase amounts to an extra $38 a week over three years – but it’s a lot better than the stagnant paychecks we endured for most of the previous decade.
Consider this: In 2004, real average annual wages per job were $43,434. In 2013, it was $43,286. In other words, inflation ate up any pay raise local workers received during that time and a little bit more.
But as the job market has improved, so have our wages.
• Over the last three years, the real average annual wages per employee in the Buffalo Niagara region has gone up by 4.5 percent. That’s not a windfall, by any means, averaging roughly 1.5 percent a year.
But what stands out is that the local increase is better than the 4 percent rise in average wages nationally. Wage growth here topped the national average slightly in 2013 and has matched it during 2014 and 2015.
In short, we’ve started to catch up a little bit after the region’s wage growth lagged behind the rest of the country during the recession and throughout the long decline in our manufacturing base, which cost us almost 45 percent of our largely good-paying factory jobs since 1990.
• Much of that strength is coming from the region’s private sector, which includes everything except government jobs. Real wages from the region’s private employers have grown a little faster than the national average during each of the past three years, rising by 4.6 percent since 2012, slightly better than the 4.1 percent rise nationally.
• Financial services are a bright spot for wages, rising by 8.3 percent over three years to just over $60,000, but even with pay here growing faster than the industry average, those jobs pay an average of $28,000 a year less here.
• Real manufacturing wages grew by 3.3 percent since 2012, a tad faster than the national increase.
• Some of the fastest wage growth has come in some of the lowest-paying jobs, which likely reflects the increases in the state’s minimum wage and the ripple effect that has on other jobs that pay close to the minimum.
Average wages for leisure and hospitality workers, which includes people who work at hotels, bars and restaurants, jumped by 6.9 percent over the past three years, after inflation, compared with 4.5 percent nationally.
But the average annual wage for those employees is just $22,600, or about half as much as the average job in the region, even with pay increases that topped 8 percent last year and approached 3 percent in 2014.
The education and health care field also had strong wage growth, reflecting the addition of higher-paying jobs on the Buffalo Niagara Medical Campus and the region’s strong higher education sector.
Real average wages in those fields grew by 5.4 percent over the past three years, more than triple the 1.4 percent rise nationally. But because those fields also include a large number of low-paying jobs, from home health care aides to teacher aides, the average wage in that sector still is below average, at $41,020.
It’s not a windfall, but for workers, it’s a welcome step in the right direction.