Caption: The federal government’s Employment Cost Index for the five-county area showed local wages and salaries gaining 3.8 percent in the year ended in September. Photo by MARK WILSON , GETTY IMAGES
Southern California is again the pay-raise champ among major U.S. markets.
The federal government’s Employment Cost Index for the five-county area showed local wages and salaries gaining 3.8 percent in the year ended in September. That’s the best among 15 major U.S. markets tracked and it was the third consecutive quarter that local wage hikes topped this national ranking.
Pay increases in the third quarter followed a national economic pattern we’ve seen elsewhere: strength on the coasts. Southern California’s nationwide-leading raises were followed by Seattle’s 3.6 percent, New York’s 3.2 percent, and the Bay Area’s 3 percent. The typical pay gain nationwide ran at 2.4 percent.
Local pay is on the rise as a stronger job market thins the number of qualified candidates for jobs, and bosses scramble to fill empty positions. Yes, September’s local employment cost index result was down from 4 percent annualized pay gains in June. But that was this cycle’s high mark. And we’re up from 2.6 percent annualized raises in September 2015 and 2.3 percent a year earlier.
Look how Southern California unemployment has dipped in the two years ended in September:
• Orange County: 4.1 percent down from 5.3 percent.
• Los Angeles: 5.2 percent down from 8 percent.
• Ventura: 5.5 percent down from 6.5 percent.
• San Bernardino: 5.9 percent down from 7.5 percent.
• Riverside: 6.5 percent down from 7.9 percent.
Significant job growth has boosted local pay to a point where wages tracked by this cost-index measure are headed for the second straight year averaging better than 3 percent gains. The index failed to surpass 2 percent in 2012-2014.
A sister employment-cost index that includes benefits also has Southern California as the nation’s big-market, pay-raise leader. Local total compensation (cost of wages plus benefits) rose at a 3.3 percent annual rate in September vs. 2.2 percent a year ago. Nationally, total compensation rose 2.3 percent in September.
It’s worth noting the national laggard in this study: Houston, with wages up at just a 1.7 percent annual rate in September. Slumping energy prices have hit Texas’s once-booming economy hard and stalled many oil and gas businesses that call Houston home.
Don’t gloat, though, as you recall Texans took some high-profile swipes at California during our last slump. Rather, remember that good economic times don’t last forever.