Factory Pay Is Rising 4.2% a Year, Services Only 2.8%

Factory Pay Is Rising 4.2% a Year, Services Only 2.8%

One line in the October jobs report is easy to skip past. Average hourly earnings in the goods-producing sector, meaning manufacturing, construction and mining, are up 4.2% from a year ago. Private services are up 2.8%. The gap is the widest since 2024.

It widened because services pay is sagging, not because factories are bidding wages up.

Lay the two years out and it is clear. Goods-sector pay has tracked sideways around 4% the whole time. Services is the line that moved, sliding from 4.1% in early 2024 to 2.8% now with barely a pause. The industries that employ the most people, from restaurants to retail to professional services, are running out of room to raise pay.

The effect on overall wages is smaller than it looks. Goods production is only a little over a tenth of private employment, so the all-employee average of 3.1% essentially follows services. Prices are up 3.7%. On that arithmetic, the workers still gaining in real terms are on factory floors and building sites.

Manufacturing added 19,000 jobs in October, so this is unlikely to flip soon. On the cause, be careful about crediting AI alone: tariffs and reshoring push the same way, and the data cannot easily separate them.

Source: US Bureau of Labor Statistics (Image: @AnnaEconomist)