February 23, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Notta.

Hi everyone, this is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of Trends Talk. We at ITR are your apolitical and unbiased source of economic intelligence. And today I wanted to discuss the labor markets. Labor market’s always in the media for good reason, it’s always in front of mind for business owners. And I wanted to talk about where we are, as well as what we’re seeing from some of the current wage pressures today.

So I know a lot of folks like to focus on the unemployment rate. Well, we here at ITR do look at the unemployment rate, of course, but we also like to look at the labor market in terms of employment rather than unemployment. We look at a data series called US Private Sector Employment, that is in our Trends Report. And again, it’s really evaluating the number of individuals employed in the private sector. That data does come from the BLS, I know there are some concerns or have been some concerns around the validity of the BLS data. So we also look at a data series that’s ADP employment data set, just to corroborate the data that we’re receiving from the BLS. Both data sets on a year-over-year basis are in a very similar point. We are seeing the labor markets slow from an employment standpoint. So I’m not saying contract, I’m saying slow. We are seeing a slower pace of growth in the labor market today. And again, that’s represented both by the BLS data and by the ADP data. So we are encouraging folks to take advantage of some of the slowing in the labor market, especially if you’re in one of the industries that’s poised for growth in 26, 27, 28, as many of our forecasts for several industries are. So take advantage of some of the slowing because it’s likely as the economy continues to heat up, we are going to see this labor market tighten in the future.

But I really wanted to focus on wages today. We look at US median annual earnings, that’s the data set from the BLS as well. And if you look at the 12 month moving average for the median earnings here in the United States, that’s at about $62,500. So that is the median salary over the course of the last 12 months. But what I’ve been highlighting is that the pace at which our wages are increasing is faster, elevated, whatever adjective you want to use compared to what we typically were used to throughout history. So let me give you an example. I look at the 3/12 and 12/12 growth rates for median annual earnings from about 2006 all the way up until the pandemic. We often saw wages in between that one and 4% range on average. But then when the pandemic hit, we saw wages climb as high as 10% on a 3/12 basis. And still today we’re sitting elevated despite the slowing in the labor market at a year-over-year growth rate in wages and earnings of about 4.4%.

So yes, wages have slowed compared to where we were in those post-pandemic years, but we’re still elevated above that 4% level. And for certain industries, that number is even higher. So again, if we take the 4.4%, which is the median 12/12 growth rate, and we look at different industries, there are some industries above that 4.4%, there are some industries that are slightly below. So construction, for example, construction annual earnings are growing at about 3.8%. That’s likely indicative of some of the weakness we’ve seen in the commercial construction markets, as well as the weakness we’re seeing in the housing market. But then you have manufacturing wages at 4.4%, truck transportation wages up at 4.6%, and professional services wages up at 5.3%. So it’s very important that we’re taking a role by role approach as we’re passing along some of these wage increases as we sit here in early 2026. Again, this is just a new reality that we expect to be a challenge for businesses.

Now, it’s great news for consumers. Consumers are seeing their incomes rise, and that’s incredible news. But it creates a challenging environment for profitability for businesses as we’re passing along higher wage increases.

The other thing I’ll add to this is there are some different regional variations in terms of wage inflation by state. We also get this data from the BLS, and it’s interesting. Most states are in that 3% to 4% range, but I’ll give you an example at the extremes. We have Kentucky’s wages growing at 3%, and then Washington State is seeing average wage inflation of 6.2%. So not only do we have to look at the different types of roles within our organization, but we also have to understand that certain states are going to command higher wage increases than others. It’s why it’s very important that we get granular into looking at these data sets rather than just using a blanket number of, say, 2% or 3%. Our goal is to help you retain employees. Our goal is to help you attract employees, and it’s very important to take a role-by-role and a state-by-state approach to really understanding the type of wage increases that folks will be expecting based on what we see in the data. Again, folks, there’s a little bit of slowing in the labor market, the unemployment rates rising ever so slightly. Take advantage of that, especially if you’re in some of those industries with those attractive growth rates coming your way in ’26 and in ’27.

Thanks so much for joining me on this episode of TrendsTalk. We’ll continue to keep you updated on labor markets, AI, and all the interesting developments as we progress throughout 2026. But for now, I hope you found this information helpful. Please like and subscribe to TrendsTalk wherever you listen to your podcast. I look forward to seeing you all in the next one. Thanks so much. Take care.