A decade after recession, a jump in U.S.
states with wage gains
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[February 05, 2018]
By Ann Saphir, Jonathan Spicer and Howard Schneider
OAKLAND, Calif./CANTON, N.Y./WASHINGTON
(Reuters) - The kind of pay raises for which American workers have
waited years are now here for a broadening swath of the country,
according to a Reuters analysis of state-by-state data that suggests
falling unemployment has finally begun boosting wages.
Average pay rose by more than 3 percent in at least half of U.S. states
last year, up sharply from previous years. The data also shows a jump in
2017 in the number of states where the jobless rate zeroed in on record
lows, 10 years after the financial crisis knocked the economy into a
historic recession.
The state-level data could signal an inflection point muffled by
national statistics.
Over the past four years, the U.S. economy added 10 million jobs and the
overall unemployment rate fell to its lowest level since 2000. Yet wages
have disappointed.
![](http://archives.lincolndailynews.com/2018/Feb/05/images/ads/current/charrons_bch041713.png)
The disconnect has puzzled economists at the Federal Reserve, frustrated
politicians concerned about rising inequality, and held regular
Americans back, even as businesses have benefited and stock markets have
surged, particularly in the first year of U.S. President Donald Trump's
presidency.
Trump says his tax cuts and regulation rollbacks are lifting business
sentiment, and in an upbeat address to Congress on Tuesday, he said
Americans "are finally seeing rising wages" after "years and years" of
stagnation.
Indeed, average hourly earnings were up 2.9 percent in January
year-on-year, the biggest rise in more than 8-1/2 years but still less
than the 3.5 percent to 4 percent economists say would be a sign of a
healthy economy.
The Reuters analysis and interviews with businesses across the country
do show wage increases in industries ranging from manufacturing to
technology and retail. Executives are mixed, however, on how much to
credit Trump after several years of job growth that has chopped nearly
six percentage points from the unemployment rate since its peak of 10
percent at the height of the 2007-2009 recession.
"Everyone in the building knows that they can leave and make more
money," said Michael Frazer, president of Frazer Computing, which
provides software to U.S. used-car dealers from its offices in northern
New York state. In response he raised wages by 6.1 percent at the end of
2017, up from 3.7 percent the previous year.
In Portland, Oregon, software provider Zapproved now hires coding school
graduates and spends up to three months training them because the
experienced software developers it used to hire have become too
expensive. And still, CEO Monica Enand says she gives her developers
twice-yearly raises "to make sure we are in the market for pay."
JOBLESS RATES AT RECORD LOWS
The Reuters analysis of the most recent data available found that in
half of the 50 states, average hourly pay rose by more than 3 percent
last year. That's up from 17 states in 2016, 12 in 2015, and 3 in 2014.
Average weekly pay rose in 30 states, also up sharply from prior years,
the analysis showed.
![](http://archives.lincolndailynews.com/2018/Feb/05/images/ads/current/ldn_business_directory_small_2016.png)
Unemployment rates are near or at record lows in 17 states, including
New York, up from just five in 2016, the Reuters analysis shows.
"Wage growth tends to accelerate when the unemployment rate gets really
strong," said Bart Hobijn, an economics professor at Arizona State
University.
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![](../images/020518pics/news_d9.jpg)
Newly hired employees take a break from training to pose for a group
photo at the chain’s soon-to-open 54th outlet in Oakland, California
,U.S., January 24, 2018. REUTERS/Ann Saphir
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California, Arkansas, and Oregon were among those both notching
3-percent-plus wage gains and plumbing record-low unemployment
rates. This broadening of benefits to U.S. workers comes as robust
global growth pushes up wages from Germany to Japan.
New York Fed President William Dudley said last month that firmer
wage gains in states with lower unemployment rates gave him
confidence that U.S. inflation, long stubbornly low, would soon
rise.
In California, home of Noah's New York Bagels, more than half of its
53 stores now pay their new hires more than the legal minimum wage,
twice as many as in mid-2017.
"It's very challenging to find enough people" in low-unemployment
areas like the San Francisco Bay Area, said Noah's president Tyler
Ricks, who expects to hike pay further this year even as he opens
five new stores.
To be sure, some states like Idaho with very low unemployment
continue to have slow wage growth, while some like Delaware with
very strong wage growth still have jobless rates well above their
record lows.
And the share of gross domestic product that feeds back to labor as
compensation has only edged slightly higher this decade, after
generally declining since the 1970s, suggesting workers have a long
way to make up ground.
Yet the state-level data hints at a first step.
![](http://archives.lincolndailynews.com/2018/Feb/05/images/ads/current/stclaras_lda_SPONSOR1_2017.png)
Galley Support, a Sherwood, Arkansas-based manufacturer of latches
for airplane kitchens and toilets, gave unskilled workers as much as
a 20 percent pay hike last year. CEO Gina Radke said it will sap
profit but with the Trump administration's business-friendly
policies set to benefit aircraft companies like Boeing, she added,
"We feel confident that we will see an increase in sales to cover
the increase in wages."
Work-site managers at Gray, a company that oversees the building of
factories and other projects from its headquarters in Lexington,
Kentucky, also got a 20 percent raise since 2016. Yet a paycheck of
up to $200,000 a year, plus bonuses, often isn't enough to fill all
the jobs on offer.
"There is just so much work around for people that it's just hard to
lure them away," said Susan Brewer, Gray's vice president of human
resources.
(Reporting by Ann Saphir in Oakland, Calif., Jonathan Spicer in
Canton, New York and Howard Schneider in Washington; Editing by
Andrea Ricci)
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