Wages Have Started Growing, But Not for Everyone

While the rest of the workforce has seen wage increases, low-income employees haven't been as fortunate. There's also a divide among the states.
by | May 5, 2017
(AP/Tina Fineberg)

After a long and slow economic recovery, most American workers have finally started to see their paychecks climb in recent years. Low-wage earners, however, haven't been as fortunate: Many have experienced little to no wage growth.

That's the takeaway from the U.S. Department of Labor's latest occupational employment statistics, which show how wage growth has played out differently across states.

We compiled the latest state-level hourly wage estimates for all occupations, along with historical estimates adjusted for inflation. Over the 12-month period ending in May 2016, seven states recorded real median wage increases exceeding 2 percent, with Iowa, Hawaii and Wisconsin reporting the top percentage gains.

Looking back further, nearly half of states experienced solid inflation-adjusted median wage increases exceeding 3 percent over the past three years of the recovery. States with the strongest increases include North Dakota (6.4 percent), Nebraska (6.1 percent) and Hawaii (5.0 percent). Meanwhile, eight states saw wages rise less than 1 percent and two registered a slight decline -- Delaware and Louisiana, where the energy sector has taken a hit.

 

Figures represent CPI inflation-adjusted median hourly wages for all occupations, current as of each May.

SOURCE: Governing calculations of BLS Occupational Employment Statistics data

 

But since the start of the recession, workers in many states have still experienced little to no growth.

Since 2007, only 11 states and the District of Columbia recorded real median wage increases exceeding 5 percent over the nine-year period. A small group of states with economies tied largely to oil and natural gas have experienced particularly sharp growth. North Dakota’s real median wage increased an estimated 22.8 percent, although it has cooled off more recently. Similar growth, while not nearly as large, took place in Oklahoma and Wyoming.

In nearly half (24) of states, real wages either ticked up less than 2 percent or failed to keep pace with inflation since 2007. Several states where wages declined are supported by large manufacturing bases that had struggled long before the arrival of the recession. In Michigan, for instance, workers have incurred a 7.2 percent drop in real wages since 2007 -- by far the largest decline of any state.

 
Figures represent CPI inflation-adjusted median hourly wages for all occupations, current as of each May.

SOURCE: Governing calculations of BLS Occupational Employment Statistics data

 

The occupational employment data represent the only survey published by the Labor Department providing state-level estimates of the median wage and wages for other segments of the income distribution. These more detailed estimates reveal notable disparities among those at different rungs of the economic ladder.

For low-wage workers, the data suggests salaries have either declined or changed little since the start of the recession. In a slight majority of states, the 25th percentile wage (for which a quarter of workers earn less than) remains below 2007 levels when adjusted for inflation. The states registering the largest declines are Michigan (-7.2 percent), New Jersey (-5.1 percent) and Delaware (-5 percent). The only states where this segment of the workforce experienced sufficient wage gains were either those with significant oil production or predominantly rural states dependent on agriculture.

Over the same time period, the 75th percentile wage has grown nearly everywhere, increasing more than 5 percent in most states.

In every state with the exception of North Dakota, the 75th percentile wage has increased at a greater rate than the 25th percentile wage since 2007. Several states where low-income earners' wages haven't improved saw their better-paid workers report sizable increases. Consider Massachusetts and Rhode Island: Inflation-adjusted wages at the 25th percentile are below where they were before, while the 75th percentile wage has increased more than 7 percent in both states.

But some low-wage workers are finally starting to receive pay raises.

More recent estimates suggest their wages have started to rebound from recession-era losses. Iowa, Minnesota, Nebraska, North Dakota and Texas are among the states where wages at the 25th percentile increased at the fastest rates over the past three years.

 

State Wage Data