Real Income Growth Beats Inflation, But Not By Much
Wages are rising in the U.S., but not enough to keep the middle class from financial stress, and a feeling of falling behind.
Case in point: real personal income (inflation adjusted) across all U.S. regions rose by an average of 2.9% in 2014, according to new government figures.
Keep in mind that this is an average figure, so it takes into account professions where wage growth is very healthy, along with those where wage growth is non-existent or even negative.
Despite this averaging, we still don’t have enough overall real growth. And what wage growth is happening varies from state to state.
Growth in real state personal income in 2014 ranged from a high of 4.7% in Nevada to just 0.4% in South Dakota.
After Nevada, the states with the highest growth rates were Colorado (4.5%), Texas (4.2%), Washington (4%), and Oregon (4%).
After South Dakota, the states with the slowest rates of growth were Kansas (0.5%), West Virginia (0.7%), Illinois (1%), and Vermont (1.3%).
States with growth rates close to the national average were Alaska (3.1%), Oklahoma (3.1%), Michigan (2.9%), New Jersey (2.9%), Massachusetts (2.8%), Connecticut (2.8%), and Tennessee (2.8%).
The only real fix for this sluggish wage growth would be above-average job creation – leading to labor shortages in key industries. This is what’s needed to boost wages beyond these anemic growth figures.
So far this year, job growth in the U.S. has been uneven at best, ranging from a low of 11,000 jobs added in May to a high of 287,000 in June. To see wages increase any faster than they are, we would need to see at least 200,000 jobs added each month. Let’s hope it happens.
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