Real wages post non-historic growth in 2019, bolstered by state minimum wage increases
One common measure of “the economy” is the wages of American workers who are not managers or supervisors, and their inflation-adjusted wages grew 1.6% in 2019. Economists call these workers “production and nonsupervisory employees” (I’ll call them ‘PNS’) and their wages are a barometer of the economic health trickling down to the level of low-wage workers. While PNS real wages grew, and 2019 was a nice uptick, it is not quite historic. And if we were to put a reason why wages finally ticked up, it likely had to do with many states raising their minimum wage.
Real Wages Over Time
The long-term average wage growth for production/nonsupervisory employees is about 0.6% since 1991. This means a few things. First, companies have only marginally paid wages above inflation rates over the past two decades, and in many years these wages were less than inflation. As we know, this sector of the workforce has struggled to see real wage increases for quite sometime, especially in comparison to rising education and health care costs.
Secondly, an uptick in 2019 for this group of workers is best explained by eighteen states raising their minimum wage that year. The most notable 2019 changes were New Jersey’s $15 per hour minimum wage, which will be phased in through 2024; Illinois going to $15 by 2025; Maryland to $15 by 2024; New Mexico to $12 by 2023; and Connecticut to $15 by 2023.
Real Wages By Presidential Term
If we compare the PNS employee real wages by recent presidential terms, we can see that growth has tended to be slow over the past seven four-year presidential terms. The current administration is averaging 0.8% growth through its first three years, which exceeds both George W. Bush’s terms; Clinton’s first term, and Obama’s first term (which was dragged down by the global financial crisis). However, the current administration’s 0.8% growth is still behind Obama’s second term (1.1%) and Clinton’s second term (1.5%).
Real Wages for Production/Nonsupervisory Employees by Presidential Term
