Sluggish Progress Persists in US Wage Expansion
In the ever-evolving landscape of the American job market, wage growth has shown a notable slowdown in 2025 compared to the peak years of 2022 and 2023. However, it remains above pre-pandemic historical averages, according to data from the Federal Reserve Bank and the Bureau of Labor Statistics.
Cory Stahle, senior economist with Indeed Hiring Lab, has pointed out that this slowing wage growth is a reflection of basic supply and demand in the labor market. He further suggests that the current situation could present opportunities to pick up workers who might have been really hard to get a few years ago.
The wage research indicates a changing dynamic for workers. For instance, wage growth for legal and marketing roles increased by 5.1% in June, while wage growth for banking and finance roles inched up 3.8% during the same period. Interestingly, wage growth for electrical engineers ticked up 6.3% year over year in June.
Despite these variations, the overall picture shows a more modest annual posted wage growth of around 2.8% to 3.0% for middle and lower-paying jobs. On the other hand, high-skill sectors such as Information (including tech and digital infrastructure) and Professional and Business Services continue to see robust wage growth of around 5.4% and 4.9% respectively.
Sectors facing structural challenges, like Leisure and Hospitality, show slower wage growth around 3.5% despite labor shortages, reflecting lingering industry difficulties.
Stahle's report suggests that the rapid wage growth of a few years ago, which peaked at 9.4% in January 2022, is "definitively in the rearview." He also notes that the pay increase rate between those who are switching jobs and those who are staying in jobs has narrowed to the point where they're basically equal.
This slowdown in wage growth, as indicated by both Indeed and the Federal Reserve Bank, is not as dramatic as it may initially seem. In fact, Stahle suggests that now could be a good time to hire because wage growth is a little more muted.
Indeed calculates wage growth by tracking advertised pay found in job postings on its site. The Employment Cost Index from June 2025 shows wages and salaries increased by about 3.9% year-over-year, compared to 5.1% in June 2024, signaling easing wage inflation.
In conclusion, while wage growth in 2025 is down from the high levels seen in 2022–2023, it remains solid with significant variation across professions: high-skill occupations command the strongest wage increases, whereas other sectors grow more slowly but generally maintain raises above historical norms.
- The slowing wage growth might provide a profitable margin for finance sectors, as the increased availability of workers could lead to greater efficiency and cost savings.
- The easing wage inflation, as indicated by the Employment Cost Index, could signal a decrease in bullish demands on the finance sector, potentially leading to growth opportunities.
- Despite the overall moderation in wage growth, high-skill sectors like Information and Professional and Business Services continue to exhibit robust growth rates, suggesting potential areas of finance investment that can yield high returns.
