For three million working Wisconsinites, wages are the most important measure of the quality of their jobs.
We provide detailed information on wage trends in this chapter because wages provide an essential perspective on job quality and economic inequality in the state. Trends in wages over time allow us to see how workers are doing and whether workers are keeping up with inflation. Consideration of median wages by race, gender, ethnicity, and education provides a quantitative measure of inequality in the state.
This section draws on the most recent data available from the US Government’s Current Population Survey, providing median wages through 2022. Throughout the chapter, wages are reported in constant 2022 dollars which correct for inflation. By expressing values in 2022 dollars, we are able to see wages in terms of consistent purchasing power. Our data covers both hourly and salaried workers (for the latter, wages are calculated by dividing earnings by hours of work). Throughout, we offer analysis of median wages (the wage for the worker at the middle of the wage distribution) to provide the perspective from the center of Wisconsin’s labor market.
2022 Inflation Reduces Workers’ Buying Power.
Over 2018-2021, wages grew significantly. Wages grew strongly especially across 2020-2021 thanks to sustained job growth and low unemployment. In 2022, inflation spiked and workers faced rapidly rising prices on everything from groceries to housing. Wages rose at the median but not enough to keep up with prices. Both nationally and in Wisconsin, the value of the 2022 median fell below the 2021 level. In terms of purchasing power, Wisconsin’s median wages fell back to 2019 level. The 2022 median wage in Wisconsin was $22.02 per hour, slightly below the national median of $22.88.
In a remarkable reversal of patterns of wage growth since 2000, lower wage workers have secured greater wage increases than higher wage workers. Unlike higher wage workers, low wage workers more often secured wage increases that kept them ahead of inflation in 2022. For this reason, Wisconsin’s considerable racial, ethnic, and educational gaps in wages have continued to recede slightly over 2019-2022. Though wage inequalities remain substantial, low unemployment rates appear to have allowed lower wage workers to improve their pay.
We provide key data on these recent wage trends below, we set wages in the context of more than four decades of change and the very slow growth of wages over that period.
The Gap between Economic Growth and Wage Growth
W.1 shows that despite substantial productivity and education advances over the last four decades, median wages have only slightly increased for workers.
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.
Wages and productivity diverged in the early 1970s, breaking the presumption of the inevitable economic advancement of each generation of Americans. Since 1979, productivity is up more than 62 percent, but workers hourly pay is up just 18 percent. Economic growth in this period does not secure shared prosperity; rather rewards have been concentrated on the rich. Working people have been left behind.
Median Wages in Wisconsin: 2022 Inflation Brings a Decade of Wage Growth to an End
W.2 displays median hourly wages for Wisconsin and the United States from 1979 to 2022. (All values are expressed in 2022 dollars which allows us to compare wages by correcting for inflation.) In 1979, Wisconsin’s median worker earned a wage well above the national median, but the state lost ground in the 1980s.
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.
Wisconsin moved back to the national median wage in 1995 and from there, wages rose slowly till 2005. The Great Recession brought wages in the state to the new century’s low point in 2012.
Over 2012-2021, wages in Wisconsin rose steadily. From 2019 to 2021, wage growth was especially strong. In 2022, the pattern of advance was broken. In nominal terms, the 2022 wage median was higher than the 2021 median, but inflation rose more rapidly than wages, leaving workers behind. Taking inflation into account, Wisconsin’s 2022 median wage fell back to its 2019 level at $22.02 per hour. In contrast, the 2021 median wage was $23.27, in 2022 dollars. Three years of wage growth were erased.
Wisconsin’s median hourly wage grew by a total of $2.26 over 1979-2022. Wages in the state are just 11% higher in 2022 than they were in 1979. That amounts to a modest 5 cent per year increase in wages over 43 years. The productivity and education of our workforce are up substantially over these years, but the reward to workers is just a nickel per hour each year.
Wisconsin’s Substantial Wage Inequality based on Race, Ethnicity, and Gender
Wage disparity by race, ethnicity, and gender is substantial. W.3 makes the disparity clear, providing median wages for six key demographic groups in the state: white, Black, and Hispanic men and white, Black, and Hispanic women.
With a 2022 median wage of $25.01 per hour, white men earned the most of the six demographic groups. White women and Black men earned roughly $4 or 16% per hour less. In 2022, Wisconsin’s Black men earned just slightly more than white women ($21.04 compared to $20.96).
With median earnings just under $19 per hour, Hispanic men ($18.84) and Hispanic women ($18.75) lagged full $6 per hour which is 25% behind white men in earnings. Finally, Black women’s median wage, $17.00 per hour, lagged white men’s median by $8 per hour, a wage gap of 33%.
Since 1979, women’s wages have grown while men’s wages have fallen. While substantial gender wage disparity still exists, the gap is smaller. W.4 makes the relatively positive trends for women clear.
The wage of Wisconsin’s median worker grew by 11% from 1979 to 2022, but this advance was not common among the state’s demographic groups. W.4 shows how real wages have changed since 1979. Men’s wages have fallen. White men’s wages are down 5.3% relative to 1979; Black men’s are down 7.5%; Hispanic men’s wages are down 9.2% over the same period.
Since 1979, Wisconsin women’s real wages have grown. This is especially true for white and Hispanic women. The median for white women grew by nearly 40% for white women, and by nearly 50% for Hispanic women over the 43 years. Black women’s wages were stagnant, barely moving over the period.
Workers with Higher Levels of Education Earn More
W.6 makes clear just how much education matters for Wisconsin workers.
In 2022, Wisconsinites with a Bachelor’s degree or more education earned a median of $31.15 per hour. Workers with Associate degrees earned $22.71 per hour. Completing higher education secures wages above the state median overall of $22.02.
Median wages for Wisconsin workers without college degrees fall under the state median. Workers with some college education and those with just a high school degree earn similar median wages ($18.89 per hour and $18.99 per hour, respectively). Workers with no high school diploma have a median wage of $13.19 per hour.
Wage Changes 2019-2022 Reduce Disparity
Racial and Ethnic Disparities
W.7 and W.8 focus on 2019-2022 wage trends and show reduction of the pronounced racial and ethnic wage disparities in the state.
Since 2019, white men and white women are the two groups with the weakest wage growth. The strongest wage gains have been made by Hispanic women (up 16 percent) and Black men (up 14 percent). Wages are up 8 percent for Hispanic men and 4 percent for Black women. The state’s ethnic and racial wage gaps remain substantial, but they have diminished slightly since 2019.
This past year has seen workers at the bottom increase their wages, and this is reflected in the stronger wage growth of Wisconsin’s Black and brown workers, who disproportionately work in low-wage jobs. Workers have taken advantage of the tight labor market to demand more from their jobs. The floor under wages in the state has come up, and this reduces wage disparity.