Wages have remained stagnant in the United States for decades. According to the Bureau of Labor Statistics, the average American’s real hourly earnings in 2018 dollars increased by only about two dollars between August 2008 and August 2018. Over that same time, unemployment dropped from 6.1 to 3.7 percent respectively, indicating that the strong labor market has failed to put significant upward pressure on wages. Put simply, despite a strong economy, wages gains are largely being outpaced by rising costs.
A variety of macroeconomic factors are likely responsible for depressed wage growth. For example, the federal minimum wage hasn’t tracked inflation for decades, slowly decreasing in real value over time. The trend toward automation also means that skilled laborers are often replaced by machines, depressing the value of their labor. Additionally, a slowdown in productivity gains since the recession may have a depressive effect on income for laborers. The explanations are myriad, but the fact remains that the average American hasn’t seen significant gains in wages for years.
Despite slow wage growth at the national level, certain cities in the U.S. have seen significant increases as a result of local economic success. Researchers at online life insurance agency Haven Life analyzed data from the American Community Survey in order to identify cities where wages have increased the most, along with the most influential industries in those cities. Here’s what the analysis revealed:
Takeaways
- Tech hubs on both coasts dominate the list of cities with the largest wage growth between 2007 and 2017.
- When it comes to wages, industry matters. As of 2017, full-time workers in Professional, scientific, and technical services had the highest median earnings at over $76,000 per year. In comparison, those working in Accommodation and food services had median annual earnings of $26,705. The national median for full-time, year-round workers was $47,016 per year.
- Full-time workers in Mining, quarrying, and oil and gas extraction experienced the largest wage growth over the past 10 years, at a 6.5 percent inflation-adjusted increase. By comparison, employees in Transportation and warehousing have seen their real earnings shrink by more than 10 percent over that same time.
Cities with the fastest wage growth
10. Frisco, Texas
- Percent change in earnings: 12.8% (adjusted for inflation)
- Median earnings 2017: $83,053
- Median earnings 2007 (in 2017 dollars): $73,625
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Management of companies and enterprises
Frisco is an integral part of the Dallas-Fort Worth metropolitan area, serving as a bedroom community for professionals that commute into the city during the day. According to the U.S. Census Bureau, Frisco was the fastest-growing large city in the United States between 2016 and 2017. This, combined with a high concentration of skilled professionals in STEM fields, has contributed to an increase in earnings for the city, but also high housing costs, according to Zillow.
9. Washington, D.C.
- Percent change in earnings: 13.7% (adjusted for inflation)
- Median earnings 2017: $70,725
- Median earnings 2007 (in 2017 dollars): $62,227
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Utilities
The nation’s capital is frequently recognized as one of the most expensive cities in the United States, and it is on track to maintain that distinction. According to Zillow, the average monthly rent in the District is more than 80 percent above the national average. As such, despite rising wages, D.C. can still be difficult for families on a budget. But its proximity to politics and other employment opportunities make the extra cost a worthwhile investment for many young professionals.
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8. Midland, Texas
- Percent change in earnings: 13.9% (adjusted for inflation)
- Median earnings 2017: $56,414
- Median earnings 2007 (in 2017 dollars): $49,547
- Largest industry: Mining, quarrying, and oil and gas extraction
- Fastest-growing industry: Administrative and support and waste management services
Thirty years ago, this list might have been dominated by oil and natural gas boomtowns. While information may be the modern-day oil, Midland still stands at number four. Situated near Texas’s border with New Mexico, Midland was a success story of the late 19th and early 20th centuries, landing on one of the largest oil deposits in the country. Even a hundred years later, Midland continues to benefit from this massive reserve.
7. Carlsbad, California
- Percent change in earnings: 15% (adjusted for inflation)
- Median earnings 2017: $90,009
- Median earnings 2007 (in 2017 dollars): $78,241
- Largest industry: Manufacturing
- Fastest-growing industry: Administrative and support and waste management services
Located on the coast between Los Angeles and San Diego, Carlsbad boasts a well-educated and affluent population. The city also has one of the largest remote workforces in the country. While manufacturing remains the largest industry by total employment, around 14 percent of workers are employed in high-tech fields, which helps put upward pressure on wages.
6. Cambridge, Massachusetts
- Percent change in earnings: 15.5% (adjusted for inflation)
- Median earnings 2017: $72,341
- Median earnings 2007 (in 2017 dollars): $62,622
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Administrative and support and waste management services
Cambridge is the beating academic heart of Boston, serving as the home of both MIT and Harvard. Many tech companies, including Microsoft and Facebook, have branches in the neighborhood in order to tap into a strong pool of students. There’s also a wealth of startups that come out of Harvard Business School every year, which often call Cambridge their home base. Cambridge residents will likely watch their real earnings continue to rise, along with demand for STEM majors.
5. Seattle, Washington
- Percent change in earnings: 15.8% (adjusted for inflation)
- Median earnings 2017: $72,052
- Median earnings 2007 (in 2017 dollars): $62,242
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Professional, scientific, and technical services
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Why Haven LifeSeattle has been one of the top destinations for technologists in the United States for a long time, thanks to a solid pedigree of blue-chip tech companies like Microsoft and Amazon that call the city home. While a 15.8 percent increase in real earnings is significant, it trails other major tech hubs on this list and may be partially offset by skyrocketing housing costs.
4. San Francisco, California
- Percent change in earnings: 19.7% (adjusted for inflation)
- Median earnings 2017: $80,812
- Median earnings 2007 (in 2017 dollars): $67,507
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Agriculture, forestry, fishing and hunting
Silicon Valley has been the undisputed epicenter of technology for decades, but its history stretches back even further into the late 19th century, beginning with the dawn of the radio and telegraph industries. A commitment to the cutting edge has established San Francisco as one of the global focal points for all things tech, drawing the country’s brightest engineers to the city to start companies—many of which grow into household names. It’s no surprise that San Francisco residents have seen their wages outpace the national average.
3. San Mateo, California
- Percent change in earnings: 19.8% (adjusted for inflation)
- Median earnings 2017: $87,371
- Median earnings 2007 (in 2017 dollars): $72,911
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Arts, entertainment, and recreation
San Mateo is a wealthy community in the San Francisco Bay Area located just twenty minutes away by car from Silicon Valley. The proximity to the center of the tech world has drawn in many professionals and investors, putting upward pressure on wages as the tech industry continues to grow.
2. Hillsboro, Oregon
- Percent change in earnings: 20.3% (adjusted for inflation)
- Median earnings 2017: $59,466
- Median earnings 2007 (in 2017 dollars): $49,414
- Largest industry: Manufacturing
- Fastest-growing industry: Utilities
Often overshadowed by Silicon Valley and Cambridge, many forget that this city in the Portland metropolitan area is also one of America’s tech hubs. The residents certainly haven’t forgotten, as their wages have risen faster than the overwhelming majority of Americans. However, Hillsboro remains a factory town at heart, with around 13,000 of its 40,000 full-time workers employed in manufacturing.
1. Bellevue, Washington
- Percent change in earnings: 26.3% (adjusted for inflation)
- Median earnings 2017: $100,020
- Median earnings 2007 (in 2017 dollars): $79,207
- Largest industry: Professional, scientific, and technical services
- Fastest-growing industry: Arts, entertainment, and recreation
Situated on the other side of Lake Washington from Seattle, Bellevue has grown into a hub for the city’s technologists. Real wages have increased by more than 26 percent in just ten years, thanks in no small part to the massive surge in demand for computer scientists and other tech specialists. That being said, large paychecks are frequently offset by high costs of living, as property in the Seattle metro area continues to rise in value at a staggering rate.
Methodology
All data was acquired from the U.S. Census Bureau American Community Survey 1-Year Estimates, using the years 2007 and 2017. Only cities with a population greater than 100,000 were considered. All 2007 dollars were converted into 2017 dollars in order to adjust for inflation. For each city, the largest industry was calculated based on full-time employment numbers for 2017. The fastest-growing industry for each city was calculated using the total percent growth between 2007 and 2017. Industries with zero employment for either year were excluded.
The Census defines earnings as any wage-based income after adjustments, such as taxes and business-related expenses. All earnings and employment data is for full-time, year-round workers age 16 and over.
Haven Life Insurance Agency LLC (Haven Life) conducted this analysis for educational/informational purposes only. Haven Life is an online life insurance agency offering term life insurance issued by Massachusetts Mutual Life Insurance Company. Haven Life does not provide tax, legal, investment, or housing/real estate advice, and the information in the study should not be relied on as such. You should consult your own tax, legal, investment, and other advisors, as appropriate, before engaging in any transaction.
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