Low unemployment may push wages up in Southern Utah

ST. GEORGE – Southern Utah unemployment is at its lowest level in several years, and this may be starting to put upward pressure on wages. It may also signal a change in the business cycle in southwest Utah.

Most southwest Utah counties experienced job creation during the second quarter of 2014, with unemployment rates reaching the lowest levels in half a decade, Lecia Langston, senior economist for the Utah Department of Workforce Services, said.


Read more: Washington County unemployment hits 6-year low; Iron County at 4.2 percent


“While wage data is not yet available for 2014, an ever-decreasing unemployment rate and strong job growth suggest that wages for the recently hired should begin to rise in southwest Utah during the coming months,” Langston said.

Southwest region wage data includes Iron, Beaver, Garfield, and Kane counties | Graph courtesy of Utah Department of Workforce Services, St. George News
Southwest region wage data includes Iron, Beaver, Garfield and Kane counties | Graph courtesy of Utah Department of Workforce Services, St. George News

The most recent occupational wage information is from 2013, showing the median hourly wage for Washington County at $13.73 per hour.

Iron, Beaver, Garfield and Kane counties are surveyed together and have a median wage of $12.71, Langston said. Iron County dominates that figure because its economy is much larger than the other three counties.

Data from a new analysis program is giving economists a broader picture of wage behavior during the most recent recession and recovery than was previously available.

The data Langston uses is from “stable” hires and jobs, which are those lasting at least three months from a 12-month period. This allows tracking of broader trends by eliminating the effect of temporary and seasonal employment.

This trend of higher wages is seen first in new-hire wages and can provide a first indicator of a change in economic conditions, Langston said. The average new-hire wage responds more directly and rapidly to the business cycle than the average wage.

In southwest Utah, the average wage of new hires was more reactive to the economic downturn and expansion than the average wage for all jobs. Both wages increased dramatically during the boom preceding the recent recession. However, the average hire wage peaked much earlier and lost ground more rapidly.

The average wage for new hires plateaued from 2006 through 2007, while the all-job average wage didn’t stop climbing until the recession began.

In addition, the average new-hire wage dropped more intensely  – 9 percent – than the average wage for all jobs – 3 percent – during the downturn.

Therefore, using the average new-hire wage may provide a recessionary early warning in the future. If the average wage of hires starts to plateau, it likely suggests the economy is starting to cool.

Labor market must be expanding, near full employment

The labor market must be expanding and near “full employment” to drive wages up, Langston said.

Economic theory and common sense suggest that wages would rise during an economic expansion and decrease during a recession, she said. However, this generalization is not always true.

During the early days of an expansion, average wages often do not show strong gains because many entry-level jobs are being added at lower wages. This tends to drag down the average wage, she said.

Average wages do not rise significantly until the labor market starts to get tight, characterized by a small number of unemployed people. This pattern was obvious during the recovery from the 2001 recession.

Average wage has slowly increased

In southwest Utah, the average wage for all jobs has slowly increased since the recession. However, after an early spurt in 2010, new-hire wages have yet to show a significant increase. A large pool of jobless workers has been available to take existing new jobs.

Sluggishness in the average new-hire wage in several large industries seems responsible for the lack of wage growth, Langston said.

In 2013, wages in retail trade, healthcare/social services, educational services and transportation/warehousing showed little change in 2013. Additionally, average new-hire wages dropped significantly in manufacturing, information and professional/scientific/technical services.

When compared, the relationship between the surge in hiring during the 2005–2007 boom and wages in southwest Utah becomes clear, Langston said. At that time, unemployment rates were also very low; in most southwest counties, the jobless rate was below 3 percent. Although hiring also surged in 2012 and 2013, unemployment has just recently dropped below the 4 percent mark in the area’s two largest counties: Washington and Iron.

Though 2014 hire wage data has not yet been publicized, wages for the recently hired should start increasing as unemployment rates continue decreasing and strong job growth continues.

Average wages can increase during recession

In the 2001 recession, the average wage for all workers actually increased, Langston said. While surprising, it’s not uncommon. As the newly hired, lower-paid workers are let go, those with more experience and higher wages are retained, pushing the average wages upward. However, job loss during the recent recession was so great that the average wage for all workers slipped somewhat, she said.

Wages for different groups, industries behave differently

Wages for different demographic groups, genders and industries can behave differently than the average.

  • The average wage for women in southwest Utah increased through most of the 2007–2009 recession, only to slip in the early recovery.
  • Between 2000 and 2013, the average wage for those 65 and older has steadily increased through boom and bust.
  • The average wage for recently hired southwest Utah workers between the ages of 35 and 64 surged much earlier in the recovery than did hire wages of younger age groups.
  • The average wage for all workers ages 35 to 64 also showed relatively steady improvement even during the recession.
  • In the post-recession time period, the average wage for young southwest Utah workers (14 to 24 years of age) has shown little improvement.
  • The hiring wage of construction industry workers actually reached its all-time peak during the height of the recession, as government stimulus monies spurred growth in higher-paying heavy construction.

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Email: japplegate@stgnews.com

Twitter: @STGnews

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14 Comments

  • Brian December 19, 2014 at 2:48 pm

    How are these unemployment numbers figured? The same way the federal numbers are, where the long-term unemployed are ignored, artificially lowering the numbers? At least at the federal level the unemployment rate is completely bogus, continually dropping due to the labor participation rate skyrocketing. Unfortunately the reality is people are working harder (and longer) than ever just to make ends meet, and the cost of necessities are going through the roof. Of course, the stated inflation rate is bogus, too, since they ignore anything of substance, like food and energy.

    • Joe Smith December 19, 2014 at 5:03 pm

      Well Brian, you no longer have to worry because the new republican congress is going to “fix everything up real good” just like they have in the past.

    • koolaid December 19, 2014 at 7:27 pm

      Exactly. Those low unemployment figures are fabricated or due to people not filing for unemployment…. the same koolaid poured into your glass by the GOP and Faux News. The positive economic recovery since the Democrat caused recession during the Dubya years is also false, just something on paper, just like the GOP and Fool’s News tells you

  • Burton December 19, 2014 at 5:41 pm

    Once again there Joe, are most people better off now than they were six years ago!? No….. They are not. Wages are stagnant. Shovel ready jobs never happened. More people on food stamps or “SNAP” as you guys like to call it than ever before in history. So the “evil republicans” that your party refers to them as has just as much opportunity to mess it up as your party has. The take from the people who work and give it to those who dont party you all love so much. Oh wait, we all know the drill. It’s all Bush’s fault! Boo hoo. Get over it and take a little responsibility for the party you think so much of.

    • Joe Smith December 19, 2014 at 6:22 pm

      Like I said before I’m no Obama fan, but the good ol’ R party has that reputation for “fixing things up real good.” Just wait, it’ll be a real good old hoot and good time just like the bush years… Look what they’ve done already– they forced through a rider on the budget bill that’s gonna take restrictions off the too big to fail banks, and make it even easier for them to get a bail out when they screw up with taxpayer money. Great guys, those R party guys huh?

  • Shelly December 19, 2014 at 7:15 pm

    Average wages in St. George will always be low, that’s the way it is, and that’s what it will always be. After ten years of living here, there is no difference that I can see with the average pay rates. I know lots of people who moved here and took a big pay cut in exchange for warmer weather.

    • koolaid December 19, 2014 at 8:28 pm

      How do you like the housing cost increase during those 10 years as compared to wages? The poor just keep getting poorer. That’s the way the GOP wants it.

  • rickie December 19, 2014 at 10:36 pm

    I would like to know if that…
    “The most recent occupational wage information is from 2013, showing the median hourly wage for Washington County at $13.73 per hour.”
    …Also includes any benefits? Such as Retirement $ , Health, Life, Dental insurance, and other benefits? Where does this figure into the “$13.73 per hour”? or is it extra and not figured into the “#13.74 per hour”?

  • asianspa December 20, 2014 at 11:01 am

    It is wrong to speak out about the wage slavery in Southern Utah because a lot of the fine upstanding business owners are LDS Bishops , stake presidents, and councilmen…. Just be meek and await your rewards in the next life. Dont forget those that complain about the low wages are just lazy and ungrateful!

    Southern Utah it is time to get a sense of REAL pride and realize you can’t be the best or a leader in anything unless you are willing to attract the best…. that means offering $$$! You want better services both private and government…. stop patronizing business and entitites that promote wage slavery! As a consumer and a worker MAKE these idiots put some more liquidity into the economy. I have heard too many campaigns about shop local…. I want some campaigns aimed at the business owners to REWARD the local workforce and give them a decent enough wage so they have something to shop local with.

    • Joe Smith December 20, 2014 at 3:29 pm

      Not only that, but most of them would like to abolish the federal minimum wage and pay their workers $5 an hour or less, but that darn Obama won’t let them do it. DARN LIBERALS!

    • Koolaid December 21, 2014 at 8:34 am

      How about equality for women in the work place in southern Utah?

  • Julie Applegate Julie Applegate December 20, 2014 at 11:14 am

    Rickie, the wage information in this article does not include any benefits such as health, dental or life insurance.

    Thanks,
    Julie Applegate

  • ladybugavenger December 20, 2014 at 11:20 pm

    Wow, I’m poor. I don’t make anywhere near $13 an hour here in st George. Oh, but I’m not poor enough for government assistance….dang kids grew up and moved out

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