Wage Change Insights (A)

Part
01
of four
Part
01

Wage Change Insights (1)

Between 2000 and 2019, Alabama, Alaska, and Arizona have all enjoyed an average, inflation-adjusted rise in wages. For each, manufacturing industries have facilitated these wage increases. In Alabama, the auto industry helped keep wages up while in Alaska and Arizona the construction industry with its generally well-paying jobs played a role.

Insight #1: Wage Increase Support from Alabama's Auto and Aerospace Employment

  • Over the last two decades, Alabama's auto industry has been key to its average, inflation-adjusted wage increase of $6,993. One contributing factor has been the State's auto industry, which has shown a job growth of 150% between 2000 and 2018 to over 40,000 auto industry jobs that paid well over the State's average wage. For example, auto manufacturing jobs averaged annual wages of $63,856 ($1,228 per week * 52 weeks). Those wages were $21,500 more than the State inflation-adjusted average in 2018 ($63,856 - $42,229).
  • Between 2000 and 2017, the growth in Alabama's aerospace industry also helped push up wages. During that period in the Huntsville metro area (Alabama's second largest city), both employment and wages grew around twice the rate in the rest of the United States. For example, as of May 2018, according to the US Bureau of Labor Statistics, an aerospace engineer's mean wage was $115,820 per year.

Insight #2: Wage Increase Support from Alaska's Construction Employment and Minimum Wage

  • Between 2000 and 2019, construction has played a role in Alaska's inflation-adjusted average wage increase of $3,207. Overall from 2000-2018, construction jobs rose in total annual wages and salaries from just over $702 million to over $1.3 billion. These totals effect on average wage increase over the years derives from construction jobs being some of Alaska's best paying jobs (e.g., 43% higher in 2018 than the State average wage).
  • Another factor in Alaska's wage growth is its minimum wage of $10.19 per hour which represents a 55% increase since 2000 ($5.65/$10.19). Alaska's minimum wage is the United States' 12th highest.

Insight #3: Wage Increase Support from Arizona's Financial and Construction Employment

  • Between 2000 and 2019, Arizona's average wage average inflation-adjusted wage grew $6,070 in part due to the continuing success of financial activities employment, which has consistently outpaced average US growth in these jobs. Arizona's rise as a financial hub has come from expansion by financial companies that are not as tied to traditional locations, such as New York, and can choose more affordable locations. As a higher wage occupation, financial employment growth helps fuel overall wage growth.
  • Between 2001 and 2018, Arizona also consistently outpaced average US growth in construction employment for 11 of the 18 years, including the last 3. While construction jobs are still 24% below their pre-recession peak, employment is roaring back with a 10.8 percent year-over-year gain in 2018. On average, even the lower paying, more labor intensive construction jobs pay more than Arizona's average wage. For example, in 2018, such jobs paid an average of $51,220 per year compared to Arizona's average wage of $47,419 for that year. As a result, consistent construction employment has generally pulled Arizona's average wage up over the years.
Part
02
of four
Part
02

Wage Change Insights (2)

The state of Arkansas has not experienced significant change throughout the last two decades, remaining one of the poorest of all fifty states. The reasoning for Arkansas' minimal change is due to their lack of opportunity; for as compared to other states, in the last two decades Arkansas is listed as having one of the worst educational systems, infrastructure, as well as having one of the highest crime rates. To add to the lack of opportunity, Walmart is the only mega-company with a headquarter located within the state. California is significantly different from Arkansas, as it is the most diverse state in terms of the economy. Although the minimum wage has risen in the last two decades, it does not match the rate of inflation, thus resulting in high levels of poverty. In the early 2000s, Silicone Valley was the primary source of revenue; however, although technology companies still exist, much of California's economy has now shifted to agriculture and other service products. Compared to any other state, California took the most damage in the 2008 recession (lasting until 2012). Similar to California, the state of Colorado has also experienced a rise in minimum wage; but unless one lives in the Denver metro area (where housing and rental houses have increased their price dramatically in the past decade), living on a minimum wage salary is manageable. Colorado is unique in that it has had a large influx of young individuals that have become residents within the last decade, which research indicates could be partly due to marijuana being legalized for recreational use. The consequence of this influx is that the state has a population that is under-qualified for well-paying professions. Although the state has a large majority of unqualified individuals, the presence of large financial corporations, successful ventures, and other government agencies, could explain why Colorado ranks high for average wages.

Arkansas

  • Between 2000-2014 Arkansas implemented the same minimum wage issued by the federal government. However, in 2015 a plan was issued to increase the minimum wage annually (which also included gratuity workers receiving a small pay increase). Consequently, non-exempt, full-time employees received $7.50 per hour in 2015, $8.00 per hour in 2016, $8.50 per hour in 2017, and $9.25 per hour in 2019.
  • The three-year median-average income between 2002-2004 was $33,948, placing Arkansas third to last as the lowest income state to live in during the beginning of the 21st century. Between 2009-2011 Arkansas ranked 49th of the 50 states, having a 3-year median income of $39,806.
  • The inability to rise in rank has continued throughout the last decade. According to a 2019 census, citizens of Arkansas have a 17.2% chance of being in poverty, as compared to the national average of 11.8%.
  • The headquarters of the largest organization in the world, Walmart, is located in Arkansas, but there are only six other Fortune 500 companies located within the state.
  • The total GDP has risen steadily (not including the 2008-2009 dip), from $68.77 million in 2000 to $128.42 million in 2018.
  • Arkansas has the worst healthcare in the United States and ranked in the worst 10 states for having high crime rates, infrastructure problems, citizens with a lack of education (and the lack of opportunity for the youth to become educated), and a low GDP.

California

  • Despite having one of the highest inflation rates in the country between 2000 and 2019, the minimum wage has only risen from $6.25 in 2001 to $12.00 in 2019 (with the exception of a few counties that offer a higher minimum wage rate), thus, making it one of the most expensive states to live in the United States.
  • In 2019, California was tied in the top three for the highest poverty per family, with one out of five families unable to acquire basic physiological needs. However, there is wide diversity within the state, as many high-paying jobs remain operational in Silicone Valley.
  • In 2000, California was ranked sixth in the world's largest economies, and the largest sector was services (which included high paying technological jobs located in Silicone Valley). Although experiencing economic hardships in the 1990s, California came back strong in the 2000s, surpassing the rest of the United States in job growth.
  • In 2009, California was ranked in ninth place as being the largest economy worldwide. Due to the recession, all sectors (except for education) experienced a sharp decline, with construction and trade/transportation/utilities being hit the hardest. Furthermore, the state had significant budget shortfalls in both 2001 and 2008, requiring increases in state taxing and a one-time federal bail-out plan in 2009.
  • California was most likely hit the hardest during the 2008 financial crises as, unlike the majority of other states, they were stuck in the grueling financial recession until 2012. This is most likely due to decreases in state income, corporate taxes, and other taxes in the years prior to 2008.

Colorado

  • After Colorado's implementation of The Colorado Minimum Wage Act 24, their minimum wage for both non-exempt regular and tipped employees has been increasing on an annual basis. In 2019, the minimum wage for non-exempt employees was $11.11 for regular employees and $8.08 for tipped employees, which is much higher than the federal minimum wage for non-exempt regular employees ($7.25) and tipped employees ($2.13). Although Colorado has had an increase in inflation rate as compared to the rest of the country, one dollar in Colorado in 2000 was only worth $0.07 more than one dollar in 2000 that is influenced by the federal inflation rate. This could explain why Colorado is ranked 7th for average wages per year as compared to the other 50 states.
  • Due to the legalization of recreational marijuana in 2014, which resulted in an excess of entry-level positions, Colorado experienced historic lows of unemployment rates by 2017. The consequence of an excess of entry-level positions was that the median hourly wage was 2% lower than the median hourly wage in 2000 (after adjusting for inflation rates). Note: As the median is the middle number, the overall population size (which is largely compromised of entry-level employees) has a large impact on this statistic. The outliers making significant amounts of money are not provided much weight in the calculation.
  • A survey conducted in 2019 displayed that 7 out of 10 residents of Colorado found it more difficult to make a living than it used to be (the questionnaire was not specific of the time frame). A large factor in this could be the home prices in Denver, which have experienced a 104% price increase in the past decade, and the monthly rent, which is on average 85% higher.
  • Although there appears to be an influx of entry-level positions, in 2019, the largest industries in Colorado were finance, insurance, and professional and business services. Furthermore, there are a number of government-run agencies such as NORAD. As these are considered high-paying jobs, this could explain why Colorado has a high average wage despite the high number of entry-level employees.
Part
03
of four
Part
03

Wage Change Insights (3)

There were vast and varied changes in average wages in Connecticut, Delaware, and Florida between the years of 2000 and 2019. These increases and decreases, both temporarily and over the longer term, have many differing causes and theories for their cause, including a directly correlated and changing Consumer Price Index in Connecticut, the loss of businesses in Delaware, and whether the labor market gained or lost jobs in Florida. All three states have seen laws passed and enacted to increase minimum wage over the specified time period.

Connecticut

  • In Connecticut, before 2019, the minimum wage was last changed in 2008, when it was raised $3.35 from $7.65 to $11.00 per hour. The state's minimum wage rate is directly linked to a Consumer Price Index, intended to increase the hourly rate along with increases in inflation, with the current wage rates re-evaluated annually.
  • In May 2019 the state passed a law to gradually raise minimum wage rates to $15.00 over the span of several years, while indexing it to the Federal Economic Indicators.
  • Between the years of 2007 and 2017, average salary decreased an average of 0.3% a year for the lowest income households, while those in top ten percent of the wages saw an average increase of 0.4% a year.
  • A report from Connecticut Voices examines two common explanations for stagnant wages: one being the result of a shift in the economy from high- and medium-wage to low-wage, service-focused employment, and second, a skills' shortage that causes jobs to stay unfilled as businesses cannot find qualified employees. Their analysis highlights that since 2014 Connecticut has added more jobs in higher-wage sectors, and also examines evidence of sectors with skilled labor shortages not seen rising wages.

Delaware

  • Delware's minimum wage increased on January 1, 2007, by 50 cents to $6.65 per hour. This was the second and final tier in a planned increase passed by the state and signed into law by Governor Ruth Ann Minner.
  • In January 1, 2008, the Delaware state minimum wage increased from $6.65 per hour to $7.15.

  • Delaware's decrease in wages shown in the graph over this time are attributed to the state being famously kind to business, with laws favoring businesses and low taxes. There are more businesses registered in Delaware than people, but litigation in recent years in the business-service industry has caused the number of corporations registered in Delaware to be 11% lower in 2015 than it was in 2000.
  • Over the same period of 15 years, employment in the state's professional and business-services sector dropped by a tenth, with wages falling for the past few years. Wages also decreased in the financial sector which struggled with low profits.
  • Delaware’s minimum wage was increased to $8.25 in 2015. Working 40 hours a week for a year (52 weeks) at this rate of $8.25 earns $17,160 before taxes, with only a dollar more an hour ($9.25) increasing that annual salary to $19,240.
  • In October 2019, Delaware’s minimum wage increased from $8.75 per hour to $9.25 per hour.

Florida

  • On Jan. 1, 2019, Florida's minimum wage saw its greatest increase since 2012, adding 21 cents.
  • 21 cents adds an extra $437 each year, bringing the annual income of a family of four to $17,597 before taxes, far below the federal poverty level of $25,100.
  • The Orlando metro area has seen over 51% increase in population over the last 19 or so years, but only about a 5% income increase, placing Orlando among other major cities with similar low wages such as Atlanta, Las Vegas, and Reno. Cities in Florida like Ocala, Sarasota, and Lakeland are all in a similar situation.
  • Florida's Department of Economic Opportunity reports that wages will increase 1.12%, or 10 cents, to $8.56 per hour ($5.54 for tipped employees) in 2020.
  • The Florida Department of Economic Opportunity is required annually to calculate a minimum wage rate based on "the percentage of increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region for the 12-month period prior to September 1."
  • An article in 2017 states that since the last decade, for most Florida workers average annual wages adjusted for inflation were stagnant regardless of the performance of the economy, or whether the labor market lost or gained jobs. After the start of the Great Recession in December 2007, wages decreased 1.75%, going from $45,469 to $44,672.
Part
04
of four
Part
04

Wage Change Insights (4)

While wages have increased in Georgia, Hawaii, and Idaho, Georgia and Hawaii have not seen significant growth rates. Despite the growth seen in Idaho, wages continue to be below the national average in this state. In these three states, technology is one of the economic drivers and one of the causes of wage increase.

Georgia

  • While an increase in average household income and wages has been observed in this state, this increase is lower than the national average.
  • This stagnant income is estimated to be caused by the nature of work occupations in Georgia. While there are numerous manufacturing companies, the majority of workers in the state are involved in the service industry.
  • However, a lower than average cost of living continues to attract businesses and workers. This has led to an increase in construction as well as growth in the technology services sector, especially in Atlanta.
  • The increase of high-paying jobs such as those in the technology sector is matched by an increase of low-paying jobs such as those in the service industry. The result is an increase in employment and a lack of growth in average wages.
  • This has led to a steady growth in the economy of the state, with higher gross domestic product than the national average.

Hawaii

  • An increase in construction during the 2000s led to more houses being used as vacation residences for tourists. This could have led to an increase in employment as the tourism industry expanded. However, the average income barely grew during these past two decades after inflation was accounted for.
  • The steepest difference was observed during the 2008 financial crisis. Its effects were felt in this state in 2009, when tourism decreased and average income plummeted. However, after 2010, it started to increase again. By 2014, the increase in income had returned to the wage average before the crisis took place.
  • A great number of employees work in the service industry, which has historically low wages. 90% of the gross product of the state derives from this industry, which is directly related with tourism.
  • It has been reported that in 2019, technology start-ups are increasing their presence in Hawaii. An increase in salaries in this sector was specifically seen in Honolulu. This could be a driver for increase in average wages in the state.

Idaho

  • Despite slight growth, Idaho wages have been below the national average wage for the past years. One of the reasons for this might have been the low cost of living in the state. This meant that despite the below-average wage, residents had high purchasing power.
  • Stability in prices provided by the constant growth of the economy in this state is another cause for these sustained wages.
  • In 2017, growth in personal income was seen in the state. This was mainly fueled by the growth of the computer parts manufacture industry in Idaho. Technology-related jobs pay higher wages than other jobs all across the nation.
  • However, as the population grows and people from other states move to Idaho, real estate prices have increased. This could lead to these wages being insufficient as the cost of life increases. This has led to proposals for higher wages in the state.

Research Strategy

After an extensive search in different news outlets and economic reports, insights for wage changes throughout the years were not readily available for the states of Georgia, Hawaii, and Idaho. However, there were regional and national reports available about the economy of these states, which allowed us to correlate it with wage trends observed in Georgia, Hawaii, and Idaho. We used business journals, economic studies, and analysis allowed to find the relevant data.
Sources
Sources

From Part 01
Quotes
  • "Alabama’s robust auto industry has transformed the state economy over the past two decades, as well as communities scattered from the Tennessee Valley to the Gulf Coast."
Quotes
  • "According to recently updated population numbers from the U.S. Census Bureau’s American Community Survey, Huntsville’s 2018 population is now estimated to be 199,808, just higher than Montgomery’s 198,218."
Quotes
  • "'We have legacy, so with our aerospace heritage, we work very hard on that to make sure that we maintain that,' says Chip Cherry, chief executive and president of the Huntsville/Madison Chamber of Commerce. 'We have about 400 aerospace companies in our market, so a very rich concentration of them and a lot of expansion in that.'"
Quotes
  • "Historically, the construction industry often dictated the direction of Alaska’s economy as well as its strength."
Quotes
  • "The subway stops near Wall Street are still crammed in the mornings yet financial firms in New York - once the centre of the money universe - aren't expanding the way they used to. Companies in far-flung states such as Arizona and Texas are seeing the rise in financial jobs instead."
Quotes
  • "While many of the finance and insurance jobs in the Valley are more of the back-office and customer service center variety and probably don’t get paid as much as bankers and brokers on Wall Street, McPheters said finance is one of the higher wage sectors Arizona needs to boost overall wages."
Quotes
  • "A decade ago, the state was grappling with foreclosures, bank failures and scores of empty subdivisions. Its unemployment rate peaked at 10.9 percent, about a percentage point higher than the nation’s. Today jobs have recovered, and the state is back to building seemingly every kind of development, from high-rise apartments and condominiums in the urban core to golf-course-adjacent ranch homes in the exurbs. "
Quotes
  • "On one hand, the state’s construction industry continues to boom, adding 2,800 jobs last month and 16,700 in the past year. That latter figure was enough to post a 10.8 percent year-over-year gain."
From Part 02