For three million working Wisconsinites, wages are the most important measure of the quality of their jobs.
Despite the global pandemic and the restructuring of every aspect of work and life in response to it, wages continue to provide an essential lens on job quality and inequality in the state.
In this section, we rely on most recent available data from the Current Population Survey and provide median wage series through 2020. The 2020 data captures some of the impact of the pandemic and associated shutdowns that began last March. We discuss wage trends in the last two years but also provide context from the last forty years.
Wage trends over the last 40 years fall short of the norm established in the post-war period. From the end of World War II until the 1970s, median wages were closely tied to overall economic growth. As the economy grew and productivity increased, workers’ wages advanced. This was the period of “shared prosperity,” when growing GDP was linked directly to growing paychecks for workers.
Jobs Matter More in the US
In the US, your well-being derives directly from the quality of your job. Higher-wage jobs deliver good benefits (health insurance, retirement, and leave). Lower-wage jobs provide smaller paychecks but also tend to offer volatile and insufficient hours and weaker or no health insurance or paid leave. This variability would surprise workers in most advanced economies, where health insurance is a right of residence and hours of work and paid vacation are guaranteed by law.
The Gap between Wages and Productivity
Despite productivity and education advances over the last quarter of a century, median wages have only slightly increased for workers and have even fallen for some groups.
W.1 shows how wages and productivity come apart in the early 1970s, defying the presumption of the inevitable economic advance of each generation of Americans. Since 1979, productivity is up more than 70 percent, but workers hourly pay is up by just 17 percent.
We know that in the state and in the nation, productivity is up. But workers don’t see the reward.
Median Wages in Wisconsin: Two Years of Strong Wage Growth
The 1980s—especially difficult years for Wisconsin—brought considerable real and relative wage decline, leaving Wisconsin workers nearly a dollar per hour behind the US median.
W.2 displays median hourly wages for Wisconsin and the United States from 1979 to 2020. (Inflation is accounted for; all values are expressed in 2020 dollars.) In 1979, Wisconsin’s median worker earned a wage well above the national median, but lost ground in the 1980s. Wisconsin finally moved back to the national median wage in 1995, rising slowly till 2005. The Great Recession brought wages to a low point in 2012. Since 2012, the median has been rising. In the last two years growth has been especially strong.
Wisconsin’s 2020 median wage—$20.24 per hour—exceeds the 1979 median by $2.76 per hour. From 2018 (median wage $18.66), wages are up by more than $1.50 per hour.
Wisconsin’s Substantial Wage Inequality based on Race, Ethnicity, and Gender
In 2020, the hourly median for white men — $22.86 – was the highest hourly wage of any of the demographic groups.
White women had the second highest median, $19.03, 17 percent below the white men’s median. Hispanic men, median of $17.51, have the next highest median; 23 percent lower than white men’s. Black women with a $16.64 median, face a 27 percent deficit. Median wages for Hispanic women ($16.04) and Black men ($15.94) are 30 percent lower than white men’s wages.
W.3 shows how wage inequality has changed in the last 40 years. In 1979, men – white men, Black men, and Hispanic men – posted the highest wages. White men’s median wage, $23.18 was the highest, with Black men at $20.07 and Hispanic men at $18.24 per hour. All these wages were substantially higher than the median wages of all three groups of women at the time.
From Gender to Racial Disparity
In 1979, the labor market was marked by a clear gender disparity. By 2020, the disparity of race and ethnicity were more pronounced.
From 1979 to 2020, men’s wages fell and women’s wages grew. The most dramatic gains have been for white women and Hispanic women, whose median wages are up more than 40 percent across the four decades. Black women’s wages have risen by more than 10 percent. Men’s wages are down: slightly down for white men (1 percent decline), with greater decline for Hispanic men (down 4 percent) and a substantial decline for Black men (wages down 21 percent).
W.4 below allows you see Wisconsin’s 40-year wage trends by gender, race, and ethnicity. (We use three year moving averages in the chart to help clarify the presentation.)
Wage Growth 2018-2020 Slightly Closes Racial and Ethnic Disparities
W.5 shows that strong wage growth across the last two years has closed some of the pronounced racial and ethnic disparity in the state.
In the last two years, the strongest wage gains have been posted by Hispanic women (wages up 31 percent). Black women’s wages are up 24 percent and Hispanic men’s wages are up 21 percent. Black men’s wages are up 9 percent. The two groups with the slowest wage gains across the last two years are white women (up 7 percent) and white men (up 3 percent). The state’s ethnic and racial wage gaps remain substantial, but they have diminished slightly over the last two years.
There are two explanations for strong wage growth over the last two years. First, sustained economic growth that preceded the pandemic finally showed up in workers’ paychecks. This is unambiguously good news for workers.
A more ominous factor is also at play in increasing wages in 2020. COVID shutdowns disproportionately displaced low-wage workers — restaurant, bar, and hotel workers who lost jobs during the shutdowns. Median wages rose during the shutdowns because lower wage workers lost their jobs. This likely also explains part of the dynamic in wage growth in 2020.
Workers with Higher Levels of Education Earn More
W.6 makes clear just how much more for Wisconsin workers.
In 2020, Wisconsinites with a Bachelor’s degree or more earned a median of $27.82 per hour. Workers with Associates degrees earned $21.45 per hour. Medians for both groups exceed the current state median wage of $20.24 per hour.
Median wages for workers without college degrees fall under the state median. Workers with some college earn just slightly less ($17.17) than those who end their education with a high school degree ($17.27). And workers with no HS diploma have a median of $11.56 per year.
Over the last two years, wages for those with college degrees have fallen slightly while wages for workers with less education have grown.
About the Data
In this chapter, most of the data we use come from the Current Population Survey (CPS), conducted jointly by the US Bureau of Labor Statistics and the US Census Bureau. The CPS is a national survey, but it is possible to analyze the data for a given state. The size of the Wisconsin sample for those with wages (roughly 2300 each year) is large enough to make statistically valid inferences about the general population. The CPS provides information on wages, hours, industry, and occupation for individuals who, in turn, are classified by such demographic variables as age, gender, race, and education. Sample size can be low for specific race, education, and industrial groups. For these groups, especially Blacks and Hispanics, the low sample size creates high volatility in the data. In charting median wages over time throughout this chapter, we present three year moving averages (with the exception of start and finish years which are presented without averaging).