Three Decades of Wages in Finance - Still Strong!

After moving to New York City, every time standing in front of the window of the World Trade Center after work hours and watching wave after wave of well-dressed financial workers disappeared into the corners of high-rise buildings, I began thinking: is finance labor market still prosperous? So my first weekend fun project would be analyzing the wages trend in finance industry to answer my own question and also question of many friend seeking for a job.

Is the industry still expanding?

Good news is, in general, yes. From the total annual employment number we can see that the total employment number in each sector is still growing. However, some subsector are shrinking, they are all sorts of funds, except for "Third Party Administration of Insurance and Pension Funds". Top three sector with increasing total annual employment number are: "Office of Certified Public Accountants", "Portfolio Management" and "Investment Advice".

Is the average wage for finance labor growing?

Satisfyingly, yes, but again in general. Let's first take a look at the visualized annual average wage data:

Well at least this time we see more lines raising heads recently. Not surprisingly, average wages are going strong in general, especially workers in work group "portfolio management" and "miscellaneous intermediation". However, I should also consider the economic growth and inflation with the growth of average wages to verify my intuition here. The U.S. economic growth data is presented here:

Looks like U.S. economic reacted pretty bad after the global financial crisis in 2009 which is not surprising. How about the average wage growth in finance though?

Here the measurement might have some error, since the begin year are different in two chart, (I would update once I found better data source), but we could still see that the top three job in finance industry has a larger growth rate than the economic, especially in recent years. More excitingly, finance industry in general actually stayed strong during major economic crisis/bubble in 2000 and 2009!

So my next question is: are these trend stable?

I would say we use dichotomy here:

As we can see from the plot, there are basically two groups showing different growth trend:

Decreasing sectors: major funds, accountants and other financial vehicles;

Increasing sectors: Investment Advice, Portfolio Management and Third Party Administration of Insurance and Pension Funds.

This difference/gap is still growing and extremely diverged around 2013, is it because of the lawsuit against big banks?

How does finance industry respond to major financial/economic fluctuations and crises?

As I have mentioned earlier, finance labor market reacted pretty stable and strong for major crises before 2013 in considering economic growth. However, two diverged growing trend shown after 2013, which one group of sectors keep rising while the other group slightly going down.

Which sector seemed most promising and which seemed most risky? What are takeaways?

From my previous analysis we can see that, Investment Advice, Portfolio Management seem like promising sectors in finance job market while jobs in funds in general did not performed well in recent years, but thankfully there is a rising trend in all finance labor market sector, that might indicate the recovery of finance labor market is pretty fast.

Also finance labor market react strong to finance crises and no economic cycle shown so far, so still going hard and strong!!

At the end, I am extremely looking forward for advice and cooperation! Love to hear suggestions and criticism!

References：

1. https://www.stlouisfed.org/on-the-economy/2017/february/why-economic-growth-slowing-down

2. https://www.census.gov/eos/www/naics/

3. https://www.bls.gov/soc/

4. https://www.home.locus/about-fis/

5. https://fee.org/articles/marxs-view-of-the-division-of-labor/

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Might modify later:

1. U.S. economic data source;

2. Detail analysis countering variance and other factors in economy;

Next labor market to look into:

Information and Technology! or Education!

More to update for this article later:

My code;

My cleaned full U.S. labor data

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More weekend project ideas:

1. Labor market over: industry, gender, economic statistic area, multidimensional combination etc.

2. Community economic comparison ;

3. Natural Language Processing in feature extraction;

4. Image Pattern Analysis;

5. Dynamic optimization modeling;

6. Finish reading Capital (Das Kapital by Karl Marxism);

7. Biweekly book review/blogging.

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