Wages Up Across the U.S. — Here’s What’s Happening in Each State
Whenever rising inflation makes headlines, businesses are impacted in two key ways: They need to spend more on production costs and spend more to hire new workers or keep the ones they have. But what does that mean for wages?
To find out, LendingTree analysts looked at the latest available U.S. Census Bureau data to see the states where wages increased the most between the second quarter of 2020 and the second quarter of 2021. In this period, just one state — New Hampshire — saw average weekly wages increase by more than 10%. And only two states — Alaska and Vermont — saw a decrease.
Here’s what else researchers found.
- Average weekly wages rose 4.8% in the U.S. between the second quarter of 2020 and the second quarter of 2021. Wages were up in this year-over-year period despite falling 5.5% in the most recent quarter for which data was available.
- Only one state saw wages increase by greater than 10% year over year. In New Hampshire, wages jumped from $1,219 in the second quarter of 2020 to $1,367 in the second quarter of 2021 — an increase of 12.1%. The next closest state was Washington at 9.2%.
- Wages didn’t grow in the same period in just two states. In Alaska and Vermont, wages were down 2.0% and 0.5%, respectively, between the second quarters of 2020 and 2021.
- The leisure and hospitality industry saw the biggest year-over-year wage increase, but this sector still could see a lot of growth. The industry saw wages rise from $464 in the second quarter of 2020 to $526 in the second quarter of 2021 — a 13.4% jump. But only one other industry examined — other services, including jobs such as auto service technicians and hairdressers — has average wages below $1,000.
Average weekly wages up nearly 5% year over year in the U.S.
According to the latest available data, average weekly wages increased 4.8% between the second quarter of 2020 — the first full quarter during the pandemic — and the second quarter of 2021 — when vaccine distribution was first ramping up.
|Average weekly wages, Q2 2020||Average weekly wages, Q2 2021||Percentage change in period|
More of the increase came earlier in the year-over-year period, as weekly wages fell 5.5% between the first and second quarters of 2021.
|Average weekly wages, Q1 2021||Average weekly wages, Q2 2021||Percentage change in period|
But, according to LendingTree senior economic analyst Jacob Channel, that kind of quarterly decrease isn’t surprising.
“Typically, consumer demand for a variety of goods and services tends to increase in the fourth quarter, which means that many workers need to work longer hours to satisfy that demand,” Channel says. “These longer hours mean that workers are on the clock for more time and, as a result, their average weekly wages tend to increase. These higher wages typically last through the first quarter, but eventually decline as the consumer demand falls.”
So, because of this phenomenon, a year-over-year comparison is more telling when it comes to economic trends, he adds.
Wages spike by double digits in New Hampshire
New Hampshire was the only state that saw wages jump by more than 10% between the second quarters of 2020 and 2021. This could be a result of the rising demand for workers as people opt out of the workforce.
In April 2021 at the start of the second quarter, New Hampshire’s unemployment rate was 2.8%, generally in line with pre-pandemic levels. But the state’s employment-to-population ratio — which provides a broader look at the labor market — hadn’t recovered, sitting at a similar level to just after the Great Recession in late 2009.
New Hampshire residents also have median household incomes nearly $14,000 more than the U.S. average, which could contribute to their ability to choose job options that work for them — and lead to more wage increases.
States with the highest year-over-year wage increases
|Rank||State||Average weekly wages, Q2 2020||Average weekly wages, Q2 2021||Percentage change|
Source: LendingTree analysis of the U.S. Census Bureau Quarterly Census of Employment and Wages.
Washington state came in second, with a 9.2% increase in wages during the period examined. Although there was a slight decrease in the number of employees during this time, the state’s gross domestic product (GDP) surpassed pre-pandemic levels by the third quarter of 2020 after seeing a dip when the pandemic hit. The same quick economic recovery was also seen in Florida, which could help explain wage increases.
Overall, residents in the top five states saw weekly wages increase by between $82 (Tennessee) and $148 (New Hampshire).
Wages drop in just 2 states: Alaska and Vermont
Wages in Alaska (-2.0%) and Vermont (-0.5%) decreased between the second quarters of 2020 and 2021 — the only two states where this happened. Interestingly, both Alaska and Vermont had minimum wage increases during that time. But those weren’t enough to make up for overall wages.
It’s worth noting that oil is a large contributor to Alaska’s economy. Crude oil prices dived at the onset of the pandemic, barely recovering by April 2021, so that could have negatively impacted wages. Tourism is another big industry in the state. And the fact that the pandemic lowered demand for related services could have contributed to the decrease.
States with the lowest year-over-year wage increases
|Rank||State||Average weekly wages, Q2 2020||Average weekly wages Q2, 2021||Percentage change|
Source: LendingTree analysis of the U.S. Census Bureau Quarterly Census of Employment and Wages
Vermont’s economy, on the other hand, faced challenges of its own. Part of that is due to the state’s size and the fact that it houses a small number of large employers. With fewer employment options, it’s more difficult to find opportunities to increase wages.
The other states on this end of the wage spectrum saw wage increases, but those were all less than 1%.
Full rankings: States with the highest and lowest year-over-year wage increases
|Rank||State||Average weekly wages, Q2 2020||Average weekly wages, Q2 2021||Percentage change|
|7||District of Columbia||$1,830||$1,949||6.5%|
|Source: LendingTree analysis of the U.S. Census Bureau Quarterly Census of Employment and Wages|
The leisure and hospitality industry has seen the biggest wage growth, but is it enough?
The leisure and hospitality industry saw wages increase from $464 in the second quarter of 2020 to $526 in the second quarter of 2021. (For context, the industry consists of arts, entertainment, recreation, accommodation and food services jobs.)
This marked increase in earnings could partially be because benefits spending in this sector decreased from the second quarter of 2020 to the second quarter of 2021.
That said, leisure and hospitality is also the industry with the most room for growth, given its low earnings.
Given that some workers in these two low-wage industries may fall under laws around minimum wages for tipped employees (cash wages can be as low as $2.13 an hour), these low figures are perhaps less surprising.
States with the highest and lowest year-over-year wage increases (by industry)
|Rank||Industry||Average weekly wages, Q2 2020||Average weekly wages, Q2 2021||Percentage change|
|1||Leisure and hospitality||$464||$526||13.4%|
|4||Professional and business services||$1,521||$1,624||6.8%|
|5||Trade, transportation and utilities||$980||$1,043||6.4%|
|8||Education and health services||$1,027||$1,082||5.4%|
|10||Natural resources and mining||$1,087||$1,100||1.2%|
Information came in second on this ranking and was the only industry other than leisure and hospitality that saw double-digit growth during the studied period. This industry includes jobs like customer service representatives and telecommunications equipment repairers.
How small businesses can survive wage increases
Wage increases may feel particularly difficult to navigate for small businesses. But there are ways to make it work:
- Take advantage of state and federal programs: “In the wake of the COVID-19 pandemic, many state and federal programs were put in place to help small business owners make ends meet,” Channel says. Though some programs may be closed to applications, it’s still worth looking into.
- Check with the SBA: “There are still many grants and other forms of relief that small businesses can receive,” Channel says. “By checking with the U.S. Small Business Administration, you can find a variety of resources that could help you get through these difficult times.”
- Find opportunities to cut business costs: Asking for supplier discounts, reducing office-related costs through virtual options and looking for opportunities to bundle services to save may help offset the costs of higher wages.
- Look into wage-increase alternatives: Other incentives, like more vacation days or free meals, might be a viable option to keep employees happy without breaking the bank. Overall, these kinds of changes may cost less than raising wages across the board, depending on the circumstances.
“Though paying employees a higher wage can be a challenge for many small businesses, higher wages aren’t necessarily all bad news,” Channel says. “Instead, higher wages can often mean that there is more demand for consumers and, in turn, more money coming to businesses.”
LendingTree analyzed U.S. Census Bureau Quarterly Census of Employment and Wages data. Researchers compared wage data for all 50 states and the District of Columbia. between the second quarters of 2020 and 2021. States were ranked from highest to lowest based on this percentage change. Researchers also analyzed wages data at the industry level in the same period.