Real wages on the rise across the country

July 6, 2016

ANN ARBOR—Virtually every state and metro area saw real wage gains in 2015 compared to 2014 with a 2.9 percent average rise nationally.

But oil-producing areas like Wyoming, North Dakota and Louisiana had the weakest wage growth, said University of Michigan economist Don Grimes, who analyzed Quarterly Census of Employment and Wages data from the Bureau of Labor Statistics.

“Of the 20 states that surpassed the national average in real wage growth, the Midwest—where durables manufacturing is concentrated—saw the strongest growth,” Grimes said.

In 2015, Nebraska ranked third in the nation (with a 3.9 percent real wage increase), South Dakota fourth (3.7 percent), Minnesota seventh (3.6 percent), Iowa eighth (3.5 percent), Wisconsin ninth (3.4 percent), Illinois 10th (3.4 percent), Michigan 15th (3.1 percent) and Indiana 20th (3 percent).

That leaves Missouri, Ohio and North Dakota as the only Midwestern states that did not see wage gains greater than the U.S. average.

“North Dakota’s weakness is the result of the decline in oil prices and fracking activity, but other than that the Midwest overall saw very good wage growth,” Grimes said. “Most of those states have a lot of durables manufacturing activity.”

Wage gains in California, which had the largest real wage gain among the states, was led by sharp wage gains in software publishing (17 percent), and scientific research and development (14.3 percent). Massachusetts, which ranked second in wage growth, also had large wage increases in scientific research and development (8.5 percent) and corporate headquarters (10.6 percent).

“The knowledge economy is clearly driving these states prosperity,” Grimes said.

The Quarterly Census of Employment and Wages data includes all money income such as contract signing bonuses, annual raises, stock options and profit-sharing bonuses. So it’s a more complete measure of wages than the BLS Current Employment Statistics data, which include only “regular” wages, Grimes said.

Michigan was above the national average, and ranked 15th nationally when all industries (private and government) are included and 12th for the private sector.

Perhaps surprisingly, the Flint metro statistical area (Genesee County) ranked 7th among all MSAs with growth in the average real wage of 5.3 percent, Bay City MSA (Bay County) ranked 26th and Kalamazoo MSA (Kalamazoo and Van Buren counties) ranked 37th. The Detroit metro area is 101st, with a real wage increase of 3.4 percent.

In Bay City, the real wage gains of 4.3 percent were led by wage gains in finance and insurance, professional and technical services, and food services and drinking places.

The wage gains in Flint were fairly widespread among private sector industries.

“What was notable was that real wages in Flint’s construction industry increased by 5.8 percent and in manufacturing by 7.4 percent,” Grimes said. “Also, there was almost a 1,000 job gain in the highly paid professional services and corporate headquarters industries. Adding these jobs in these highly paid industries accounted for about one-third of the wage growth in Flint.”


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