The Concord Monitor recently highlighted an analysis by Headlight Data exploring wage trends across the fifty states over the last decade. That analysis, in turn, found that wage growth in New Hampshire was among the least equal in the nation between 2005 and 2014. As troubling as that finding may be, an examination of Census Bureau data since 1979 suggests that such disparate growth is simply the continuation of a much longer term trend.
Using data from the US Bureau of Labor Statistics[i], Headlight’s analysis shows that the 25th percentile wage in New Hampshire was $25,937 in 2005, but that, by 2014, it had dropped to $24,230, a decline of 6.2 percent after adjusting for inflation.[ii] Over the same period, the 75th percentile wage in New Hampshire rose, from $54,746 in 2005 to $56,800 in 2014, a 3.8 percent inflation-adjusted increase.
In other words, New Hampshire’s low-wage earners and high-wage earners – under Headlight’s classification – saw a 10 percentage point differential in the growth of their wages over the last decade. As the table at right indicates, by Headlight’s calculations, only two states – Maryland and Rhode Island – saw a larger gap in wage growth between low-wage and high-wage workers during that time frame. In just one state – North Dakota – did low-wage workers see their wages rise more rapidly than high-wage workers between 2005 and 2014.
While Headlight’s analysis may offer some insight into the health of states’ economies, it does suffer at least one shortcoming. For example, under Headlight’s calculations, Idaho and Michigan are scored as states with very little wage inequality. Yet, the reason these two states rank so well is that wages at the bottom have simply fallen more rapidly than those closer to the top, which should not be seen as a positive outcome. Indeed, the bottom quarter of wage earners in Michigan experienced an 11.4 percent decline in their real wages, the poorest performance among all states.
Even with these limitations, the data for New Hampshire offer reason for concern. The 6.2 percent decline for the 25th percentile wage was the ninth worst among the states, whereas the 3.8 percent rise for the 75th percentile wage ranked in the middle of the pack.
Furthermore, this trend of uneven wage growth has persisted for some time, as the graph below illustrates. The data presented are based on the Economic Policy Institute’s analysis of US Census Bureau data and show New Hampshire hourly wage rates, adjusted for inflation, by various percentiles (20th, 50th or median, and 80th) between 1979 and 2014. It demonstrates that much of the gains the New Hampshire economy has generated has flowed to the top of the wage distribution. For instance, since 1990, the 80th percentile hourly wage in New Hampshire has risen by $3.64 — or 13 percent — from $27.76 to $31.40. Meanwhile, the median wage has only increased by $0.61, a gain of just 3.5 percent. The 20th percentile wage shrunk 5 percent – from $11.76 to $11.17 – over this period.
As New Hampshire’s economy continues to expand, the central task before policymakers will be to begin to reverse these trends and to ensure that working families share more evenly in the prosperity they help to create.
[ii] A percentile wage estimate is the value of a wage below which a certain percent of workers fall. For example, in 2014, the 25th percentile annual wage in New Hampshire was $24,320. This means that of all the wage earners (hourly or salaried) in the Granite State, 25 percent earned less than $24,230; 75 percent earned more than $24,230. The 2005 wage data was adjusted for inflation, so as to make a more accurate comparison with wages today.