Factors Affecting Wage Growth in Illinois, Indiana, and Iowa

• Although the state's average wages increased overall between 2000 and 2019, Illinois' wages have increased at slower rates compared to the national average following the Great Recession. When adjusted for inflation, Illinois has had the second-lowest income growth among U.S. states. From 2007 to 2019, the U.S. overall average 2.1% inflation-adjusted income growth compared to Illinois's 1.1% inflation-adjusted income growth.
• According to the Illinois Policy Institute, Illinois's population has been consistently decreasing since 2014, which has slowed economic development and caused the state's relatively low rate of wage growth. Illinois residents are moving to other states at high rates looking for lower housing costs, more competitive pay, and more job opportunities, especially for manufacturing jobs, which have declined in Illinois in the last decade.
• Additionally, since 2000, the state's pension debt has grown rapidly, with an increase of over 500%. To allow the state to cover the cost of paying off this debt, Illinois lawmakers have increased the state's income taxes twice, in 2011 and 2017. These tax hikes have had lasting negative impacts on the rate of job creation, thereby limiting wage growth as well.

• Average wages have grown in Indiana between 2000 and 2019, but that growth has been well below the national average since 2004 because Indiana's workforce has relatively poor educational attainment levels. A poorly educated workforce means that a relatively high proportion of Indiana's job market is composed of low-wage jobs, which are more likely to be lost during short-term economic downturns and slow the state's long-term wage growth.

• Additionally, between 2015 and 2019, Indiana's northwest region lost in 1,614 lucrative manufacturing jobs, with an average annual income of $100,268, as well as hundreds of jobs in merchant wholesale and publishing. In place of these above-average paying jobs, the region had increases in low-wage service jobs.

• Compared to the rest of the U.S., Iowa has seen relatively high wage growth between 2000 and 2019, with the 7th highest rate of weekly wage increases from 2007 to 2017.
• Iowa's unemployment rate has been steadily dropping and, as of 2019, was the fourth-lowest in the country, at 2.6%. Recent employers in Iowa are having to compete for workers, which has increased wages in the state. This increasing hiring competition has also resulted in employers having to seek out and train unskilled workers, which has resulted in wage increases across multiple industries.
• As a result of the increasing demand for workers in Iowa's job market, wage growth between 2007 and 2017 was particularly high in the following job sectors: 40% wage growth in natural resources and mining jobs and 30% wage growth in professional/financial services, leisure, hospitality, IT, and construction jobs.

Changes in Average Wages Between 2000 and 2019

Kansas

• Between 2000 and 2019, average wages in Kansas increased slightly in comparison to the national average. This is mainly because the period from 2000 to 2010 has been marked by the recession and was considered the “lost decade”. Also, there was an uneven job growth throughout Kansas in the decade after the year 2000.
• However, "wage and salary growth showed resilience" in Kansas state between 2000 and 2010. Moreover, during this decade, the growth in the "average non-farm wage" in Kansas was "higher than the national average, though it still lagged the region."
• A similar trend was noticed in private-sector wage and salary growth. Kansas experienced an average growth of 3%, which was higher than the national average of 2.8% over the period but still lagged behind the growth in the six-state region (3.3%).
• Between 2013 and 2014, following the "tax cuts", Kansas' wage and salary growth reached 4.7% which was behind the national average of 5.2%.
• The main reason behind the "low wage growth" between 2000 and 2019 was associated with "low productivity growth."
• Also, between 2000 and 2010, Kansas experienced a loss of 25,000 private-sector jobs. About 50% of the job loss was related to "trauma in the airline industry" as a result of the terrorist attacks of September 11, 2001. Following the terrorist attacks, there was a decade of recession which mainly affected the airline industry.

Kentucky

• The average growth in wages between 2000 and 2019 in Kentucky remained largely stagnant. Although the economic recovery started in 2010, workers in Kentucky did not notice an increase in their average annual real wages. Even in 2017, the real wage growth remained "non-existent" for most of the workers.
• However, in 2015, unemployment in the "Commonwealth finally returned to its pre-recession rate of 5.4 percent" and that was the year when workers in Kentucky also noticed growth in real wages for the "first time since 2001."
• As per an analysis from the Economic Policy Institute, even after the productivity of workers in Kentucky increased, "poor wage growth" was still perceptible. One of the reasons behind the stagnant or poor growth in wages for workers was that a "disproportionate share of the gains from economic growth is going to owners in the form of capital income and to managers’ salaries as opposed to workers in the form of wages."
• As of December 2017, Kentucky "supported 1.9 million wage and salary jobs" indicating an increase of approximately 180,000 jobs statewide after the recession. In comparison to the nation's 12.6%, the state added jobs more slowly (10.4%), yet still "at a higher rate" than all but two bordering states (Tennessee and Indiana).
• Governor Matt Bevin in Kentucky has been aggressively looking for economic development efforts, keeping the state open for business. About 45,791 new jobs have been announced with approximately $16.5 billion in investment in Kentucky since December 2015, indicating that companies are interested in investing in the state.
• Despite the governor's efforts in most of Eastern Kentucky, wages and salaries decreased for non-agriculture jobs by 14.1%. However, in 2016, the "losses started leveling off."

Louisiana

• The average wage in Louisiana has grown modestly between 2000 and 2019 due to the boom in the energy sector.
• Since 2000, Louisiana has been among the states which noticed "most of the biggest inflation-adjusted gains in average weekly wages" due to direct benefits from the boom in energy production in the US.
• In the second quarter of 2017, the average weekly wage in the manufacturing sector was about $1,332 in Louisiana. In comparison, the weekly wages in the oil and gas extraction sector were 76% higher at $2,343 and 70% higher at $2,259 in the refining sector.
• Additionally, weekly wages in the pipeline industry were 26% higher at $1,673 than the average wage in the manufacturing sector.
• Louisiana and Arizona were the only two states that have experienced an increase in "inflation-adjusted wage growth" during the first two years of the Trump government.

Maine

• The tightening labor market has driven inflation-adjusted average wages up in Maine between 2010 and 2019.
• In Maine, the number of people earning less than $10 per hour has declined from 2010 to 2018 mainly because of highly competitive labor market conditions.
• The state of Maine has seen an increase in job growth in healthcare, professional services, and the hospitality sector which has driven the average wage between 2010 to 2019.

Maryland

• The average wage in Maryland has risen between 2000 and 2019 as information technology, telecommunications, and aerospace and defense have contributed to Maryland's economic growth.
• The technology industry in Maryland contributes a major workforce with 184,076 workers in 2017 and was ranked fifth for the concentration of tech industry employment in the total workforce.
• The average wage has risen as more businesses have been opened in Maryland and the state has seen an increase of 120,000 jobs from losing 100,000 jobs from 2010 to 2019.

Massachusetts

• The average wage has increased between 2000 and 2019 in Massachusetts, as wage growth has been particularly strong in innovation economy sectors since 2012 as scientific, technical and management Services (16.9%), biopharmaceuticals & medical devices (16.0%), and financial services (12.4%) sectors had double-digit wage growth.
• In Massachusetts, technology and knowledge-intensive industry sectors along with increased employment concentration provide some of the highest paying jobs which have led to an increase in average wages between 2010 to 2019.
•  Industry output of the state of Massachusetts which is used as a tool for GDP and economic performance forecasts has also been a key driver of wage growth in the state.
• The state of Massachusetts supports nearly 111,000 jobs by manufacturing exports, compared to 6.2 million nationwide which has been another reason for an increase in average wages in the state.

Michigan

• Average annual wages have actually declined in Michigan by $528.91 over the period 2000 to 2019, adjusted for inflation, according to the figures supplied.
•  Reasons offered for Michigan's decline in wages include fewer manufacturing jobs and lower wages paid in those manufacturing jobs now than once were paid.
• Another reason offered for Michigan's decline in wages may be that union membership is declining. "In 2016, 14.4% of Michigan workers were union members. That's above the national average of 10.7%, but still a substantial drop from 30 years ago when almost 30% of Michigan workers were in a union."
• Michigan has now banned Living Wage Ordinances, which required that living wages be paid to workers. Under Living Wage Ordinances, "contractors and other businesses who receive economic assistance from these cities, townships, and counties must pay their employees .... a wage that would allow them to live above the federal poverty level."
•  Michigan is a "right to work" state, which means that neither employers nor unions can require employees to belong to a union. Studies show that right-to-work states have lower wages than do states without such laws.
• Many of the "new" jobs in Michigan are low-paying jobs. "Food prep jobs, which pay less than $20,000, grew 20 percent to nearly 75,000. Factory production work with average pay of $33,500 jumped 11 percent to 38,000 jobs."

Minnesota

• Over the period of 2000 to 2019, Minnesota's average annual wages increased by $8,289, adjusted for inflation, according to figures supplied.
• Minnesota experienced wage declines during the Great Recession, but in recent years, wages have grown again.
• Many Minnesotans are employed in education, health services, trade, transportation, and utilities, with almost 50% of the labor force in those professions in most counties. Rural counties have more people employed in agriculture, government jobs, or self-employment. The Twin Cities area, where 65% of the population lives, has a large number of people employed in professional and business services. None of these employment facts are new situations taking place between 2000 and 2019.
• Minnesota is not a right-to-work state, and has strong unions that cover 380,000 workers, or 13.7 percent of the work force.
• "Minnesota has the highest percentage of adults with a high school degree at 93%" in the US. With good schools, a healthy population, and plenty of recreation and leisure opportunities, "the state ranks third overall on Forbes' quality of life measurement".

Mississippi

• Average annual wages in Mississippi increased by $1,733, adjusted for inflation, between 2000 and 2019, according to figures supplied.
• The job of cashier is the largest type of job in Mississippi, with over 42,000 workers. According to the Bureau of Labor Statistics, cashiers earn an average $19,620 annual salary, less than half of Mississippi's median household income.
• Mississippi does not have a state minimum wage. It uses the federal standard $7.25 an hour as its minimum wage. "According to the U.S. Bureau of Labor Statistics, Mississippi's workforce participation rate is about 55 percent — ahead of only West Virginia."
• In Mississippi, the largest group of employees work for elementary and secondary schools (84,320 people). The next largest employers are restaurants and food services (74,989 people), and then hospitals (72,635 people). 
•  21.5 percent of Mississippi residents live below the poverty line (620,000 people of the 2.9 million population), higher than the national average of 13.1%. The largest demographic category of people in Mississippi living in poverty are females 25-34, followed by females 18-24, and females 35-44. 
• Mississippi's workforce is educated with 84 percent receiving a high school diploma. But during the past 50 years, "at the same time that Mississippi's workforce became more educated and more productive than ever, income inequality accelerated."

Research Strategy