5 Stocks To Buy As Wage Growth Hits 8-Yr High

In a heartening development, a key metric of wage growth increased significantly last year, signaling that gains have begun to accrue for the country’s workforce. According to December’s jobs report, average hourly earnings notched up its best yearly performance in 2016 since the economic recovery began.

Nearly all economic sectors have benefited from such pay raises. However, specific industries are performing much better on this front. Information technology, leisure, wholesale trade, manufacturing and construction are at the forefront of wage gains, and it makes good sense to pick stocks from these areas. 

Annual Hourly Wage Increase Highest Since 2009

According to the December jobs report, the U.S. has now experienced 75 consecutive months of job growth. This the longest stretch of job gains since 1939, as per The Washington Post. Even though wage growth was strong over 2016, monthly job creation remained below the average of 236,000 experienced over 2014 and 2015.

However, since Fed policymakers and most experts contend that the economy is at full employment, employers have to raise wages to retain their existing employees and attract new talent. Steady gains in employment have pushed workers’ pay higher, with average hourly wages climbing 0.4% in December. This in turn pushed the annual gain last year to 2.9%, the fastest increase since the economy started to recover in mid-2009.

Premium, Entry Level Jobs Both Pay Higher

Most wage gains seem to be centered around the top jobs which require significant levels of skill and expertise. However, entry level positions which do not require a very sophisticated skill set are also experiencing rapid wage increases. At the very top, software, energy production, telecom and entertainment workers are among the best paid employees. These paychecks are rising in excess of 4% every year.

On the other hand, low level workers who are the most essential component of the country’s healthcare sector have not performed as well. These wages increased by only 2% over 2016. However, the sector has benefited from an aging population, with wages increasing by 4.3% at nursing homes over 2016. Nowhere is evidence of a rapidly aging population more evident than the wage increase at funeral homes, clocking in at 7.1% for the 12 months ended November.

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