Wage Change Insights (C)

Part
01
of four
Part
01

Wage Change Insights (9)

Between 2000 and 2019, the average wage increased in Missouri, Montana and Nebraska. However, starting with 2003, the rates were lower than the national one. The increase was influenced by several factors like the 2008 recession, minimum wage increase, RTW legislation, cost of living, and unemployment rates. From 2000 to 2019, the strongest wage growth occurred because of the increase in people with advanced degrees and college degrees. Through the analyzed period, Nebraska's unemployment remained historically low while Missouri saw an all-time high in their average annual wage in 2018.

Missouri

  • Missouri’s major industries include food processing, beer, chemicals, printing/publishing, electrical equipment and aerospace. Furthermore, the state has a growing science and biotechnology field led by Monsanto, one of the largest gene companies in the US. However, the state was hit hard during the 2008 recession. Between February 2010 and March 2015, professional and business services (40,700 jobs), education and health services (28,900 jobs) and leisure and hospitality (20,200 jobs) posted the largest job gains.
  • Although in 2019, the unemployment rate reached 3.3% (2009–9.6%, 2014-6%, 2016–4.4%, 2018–3.1%), Missouri`s labor force has shrunk in the last years. The state economy is underperforming compared to other states, and the quality of labor force has declined. Unemployment rate went up between 2000 (3.1%) and 2019 (3.4%), peaking in February 2010 with 9.8% (298,314 unemployed people). The CES employment peaked in July 2019, with a total labor force of 2,927,500.
  • In the past four years, Missouri has seen growth in annual average wages, which reached an all-time high of $49,050 in 2018, a 3.6 percent increase over 2017 and a 10.6 percent increase over 2014. The state began both 2017 and 2018 with a higher minimum wage based on the cost of living.
  • Furthermore, in 2019, Missouri increased its rates due to previously approved legislation and ballot initiatives. Wage growth in states with minimum wage increase from 2013 to 2018 was more than 50 percent faster than in states without any minimum wage increases.

Montana

  • Montana has experienced a fast wage growth in the last 20 years. From 2008 to 2018, it had the 6th fastest growth in average annual wages among states, as the average annual wage increased by $10,000. Health and education, trade and transportation, and leisure activities industries employ the largest number of people in the state. These sectors have also experienced wage growth above their national industry averages.
  • Wage growth in the private sector has outpaced growth in the public sector. Montana`s strong growth was driven by the private sector in business services, mining and utilities, and financial activities industries, which experienced more rapid wage growth than the private sector average from 2004 to 2014.
  • The state also has the highest rate of business ownership among households in the US, making it a national leader for entrepreneurialism.
  • Low unemployment rates propels wages. The unemployment rate in Montana peaked in February 2010 was at 7.4% (37,009 unemployed people). However, in August 2019 the number of unemployed people reached 17,669. In 2019, Montana hit a 10-year low in the unemployment rate, with 530,000 Montanans working or seeking work, out of which 485,400 are employed. The states`s populations is well-educated and highly skilled. It ranks 3rd in the nation for the percent of the population with a high school diploma, and approximately 65% of the population has post-secondary education.
  • The High Tech Business Alliance (HTBA), formed in 2014, was responsible for $1.6 billion in gross sales in 2018, a significant increase from its 2017 revenue ($1.4 billion). HTBA asked the University of Montana (BBER) to collect information and insights from its members so that a better assessment of its economic footprint could be made. One of the key findings showed that the average annual salary for jobs with HTBA was 60% bigger than the average Montana annual wage.

Nebraska

  • A prominent feature of the Nebraska economy is its low unemployment rate. CES employment in December 2019 showed that 1,039,500 were employed.
  • Nebraska has a long history when it comes of right-to-work legislation. Between 2005 and 2008, annual workforce employment job numbers grew. Although growth turned negative after 2008, it was able to pick back up between 2011 and 2017.
  • Overall, in the initial years following the 2008 recession, job growth in Nebraska generally matched or exceeded the national rate. Some of the fastest-growing industries have been firms providing health care or social assistance, restaurants, and hotels. Even during the recession, employment at these firms declined very little. On the other hand, employment in the government sector has increased very little since 2010 and manufacturing jobs declined steadily throughout the 2000s.
  • Agribusiness and food processing is Nebraska`s 5th largest job provider. The average income earned per person (PCI) in Nebraska grew significantly from 2010 to 2013 due to the strong agricultural sector. Agriculture has remained a prominent industry even though prices have declined in recent years.
  • Between 2000 and 2014, Nebraska`s economy was propelled by strong agricultural commodity prices. Moreover, from 2010 to 2015, Nebraska`s employment growth exceeded the national average for agricultural and food-related wholesale.
Part
02
of four
Part
02

Wage Change Insights (10)

The states of Nevada, New Hampshire, and New Jersey have all seen average wages increase between 2000 and 2019. In Nevada, the main industry is tourism which fluctuates depending on economic conditions. New Hampshire's wages have increased due to smart manufacturing and the healthcare industry. New Jersey's growth has been driven in part by the pharmaceutical industry.

Nevada

New Hampshire

New Jersey

Part
03
of four
Part
03

Wage Change Insights (11)

Introduction

The changes in average wages in all three states are influenced by the proportion of higher-paid jobs entering or exiting the economy, the replacement of routine labor jobs with cognitive jobs, and the impact of global financial phenomena. With different dominant industries and debilitating events affecting each state independently, explanations were found to vary between the three.

Findings

New Mexico
  • One factor accounting for an increase in wages is growing employment within nonprofit organizations. Indeed, 2007-2017 saw this industry's establishments increase by 22.1%, compared to just 7.9% in other industries. This is significant since, from 2009 to 2019, the growth rate of annual average wages of nonprofits exceeded those of all other industries (3% and 1.8%, respectively).
  • Nonprofits also tend to exhibit resilience to financial hardship. In 10 of the past 11 years, nonprofits have experienced a growth in employment, even when employment in other industries declined in 2007 and 2008.
  • Elsewhere, data points to the growing presence of high-wage skilled jobs, such as mining, construction, transportation, and professional services.
New York
  • As indicated by the spreadsheet, New York currently has the biggest difference between wages and wages after inflation of any state (-$1338.807336).
  • One force behind this was the growth of technology jobs. Though loosely defined, the OSC estimates that this sector has experienced 80% growth since 2009, bolstered by the acceleration of "internet publishing", "computer system design" and "software publishers". There is reason to believe, therefore, that technology, for which the average salary was $152,900 in 2017, helped to boost the average wage.
  • Yet, the growth of 'real wages' was buffeted by fewer high-paid jobs emerging in other industries in the recent decade.
  • According to the Office of the State Comptroller (OSC), from 2003-2008 the share of higher-paying jobs made available stood at 36%: a figure which dropped to 23% during the expansion period of 2009-2018. In the year 2018, it was 12%, the lowest since 2009.
  • Another factor particular of New York was the 9/11 terrorist attacks, which damaged those industries in which wages were higher than average. As Michael L. Dolfman, regional commissioner of the Bureau of Labor Statistics, noted: it was the hardest-hit, "high-paying" jobs that were sustaining New York's "unique" economy. In Manhattan, for example, a third of job losses were in finance.
  • These job losses were largely within the higher-paid "export sector", which represented 86% of all wages lost from the attacks. 9/11 could partly account for the decline in wages (before inflation) from 2002-2003 as indicated on the spreadsheet, though most other states also suffered during these years, meaning there was a broader nationwide financial struggle.
North Carolina
  • Compared to other states, North Carolina has experienced relatively slow wage growth across all industries since 2000, at only 67% compared to 82% (in 2012). This is possibly attributable to the state's main industry: textile component manufacturing, which has declined steadily.
  • This slow growth is also potentially tied to North Carolina's lower cost-of-living (around 5-10% lower than the nation's average), which generally increases in step with wages. Another factor involved educational attainment, which has a "strong correlation" with worker wages according to economist Dr Mike Walden.
  • North Carolina's Department of Commerce link the increase in wages with the decline of routine "blue-collar jobs", which have fallen from 34% to 24% between 1997 and 2018.

Research Strategy

We consulted a range of academic opinions, primarily from economists, for explanations of the data captured in the spreadsheet. We then cross-referenced these with trends identified in the official state-produced reports themselves to ensure they held traction. As another precaution, we then procured reports from economic journals, university publications and public media to ensure they held up to further scrutiny.
Part
04
of four
Part
04

Wage Change Insights (12)

Wage changes between 2000 and 2019 in North Dakota, Ohio, and Oklahoma were impacted by various activities such as industrial growth, unionization, low-paying job concentration, and regulations surrounding minimum rage increases. A deep dive into these findings has been presented below.

North Dakota

  • The average hourly wage in North Dakota has been rising steadily between 2000 and 2019, but saw a higher jump than usual between 2010 and 2014 when it rose by nearly $4 per hour. One likely cause of this increase was due to an oil boom that hit North Dakota around that time, which helped pumped higher-paying incomes into areas that were previously struggling financially. This boom helped to spur the economy in general, as not only were the oil companies paying out higher average salaries, but small businesses in the region were then also prompted to increase their pay in order to compete for employees.
  • In 2017, it was reported that North Dakota's average wages had declined about 4% in the previous year. According to APNews, the largest wage decline occurred in the oil sector. Around this same time, the Wall Street Journal reported that North Dakota was facing a drop in oil production, which fell about 2.5% in December 2015. The drop in production was due to a price slump.
  • In 2003, North Dakota's average hourly wage declined and did not fully recover to its 2002 standing until 2011. One cause of this decline is likely related to a decline of unionized workers in the state. In North Dakota, union workers have significantly higher incomes than non-union workers, particularly in the mid-2000s. By 2008, the number of union workers in the state had declined by half.

Ohio

  • In 2013, it was reported that Ohio saw a 3.6% increase in average wages, which fell short of the national average (4.7%). At the time, experts suggested that the cause was related to new jobs being "concentrated in lower-paying industries, while corporations [were] failing to funnel rising profits into workers' pay."
  • Ohio witnessed a strong boost in wages between 2017 and 2019 when the average hourly wage increased from $22.57 to $27.97. Around this time, the state was witnessing a resurgence in manufacturing, a key sector of the state's economy which had seen significant job loss leading up to 2016. The average salary of manufacturing jobs in Ohio exceeds the average of other sectors by over $11,000 as of 2016.

Oklahoma

  • After several years of flat growth, the Oklahoma average hourly wage witnessed a noticeable boost in 2019, raising from $21.26 to $25.59. This sudden increase can likely be attributed to the fact that the state's Senate had filed a bill calling for an increased minimum wage. Although the bill didn't go into effect until 2020, it's logical to suppose employers had been willingly raising wages in 2019 in preparation and as a reflection of societal pressure.
  • In 2014, Oklahoma Governor, Mary Fallin, signed a bill that prohibited municipalities from increasing the minimum wage limit above that of the state's minimum wage. Although the governor stated that the bill was intended to protect the economy from eventual layoffs that would occur if the minimum wage was increased, the move also likely resulted in Oklahoma's average hourly wage growth to remain relatively flat between 2014 and 2018, until the state moved to increase the minimum wage around 2019.
Sources
Sources

From Part 01
Quotes
  • "Nebraska’s economy is well-positioned to continue the steady growth that has marked the past two decades. Statewide, growth in population, employment and household income has trended higher at a modest but steady pace since the end of the 1990s, and appears likely to remain relatively stable into the next decade."
From Part 03
Quotes
  • "Nearly 70 percent of the jobs lost and 86 percent of the wages lost were in fields like finance, insurance and banking."
  • "''The effect was centered on the jobs that make New York's economy unique,'' said Michael L. Dolfman, regional commissioner of the Bureau of Labor Statistics and author of the report. ''We lost the high-paying jobs, the people who pay more real estate taxes, higher sales taxes and support various elements of the economy.''"
Quotes
  • "Growth was driven by internet publishing, computer systems design and software publishers. With an average salary of $152,900 in 2017, the tech sector has become one of the economic drivers in New York City."
Quotes
  • "Since the late 1990s, nonroutine jobs have been growing as a portion of total jobs, while the share of routine jobs has fallen. In particular, nonroutine cognitive jobs (sometimes thought of as “knowledge jobs”) have increased from 30% of jobs in 1997 to 40% in 2018, while routine manual jobs (“blue collar jobs”) have fallen from 34% to 24%."
Quotes
  • "Studies show our state’s prices are between five percent and 10 percent lower than in the nation. Second is lower educational attainment in the state compared to the country. There is a strong correlation between educational attainment and worker wages."
Quotes
  • "Overall wages have increased at a slower rate in NC compared to the U.S. average over the last two decades across all industries (67% vs. 82%). This was slightly more pronounced in North Carolina’s main segment (textile component manufacturing) where U.S. wages increased by 87% compared to 65%."