Wages Matter
For Wisconsin’s 3 million workers, wages are the most important measure of the quality of their jobs.
In this chapter, we provide analysis of wages and wage trends to offer insight on job quality and economic inequality in the state. Trends in wages over time allow us to see how workers are doing and whether wages are keeping up with the cost of living. Trends in wages by race, gender, ethnicity, and education provide insight into inequality in the state and how it is changing.
This section draws on the most recent data available from the U.S. Government’s Current Population Survey, providing median wages through 2023. Throughout the chapter, we take inflation into account by reporting all values in 2023 dollars which provides a view of 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.
Below, we provide 2023 data on wages, then consider trends over the recent past (2019-2023, the period since the pandemic shutdowns), and set those trends in the context of the last four decades (1979-2023, the period for which we have reliable data on Wisconsin wages).
In 2023, Wages are Growing Again, Especially in Wisconsin
Wisconsin’s median wage rose to $23.90 in 2023, increasing by nearly $1 per hour from its 2022 level. Strong wage growth in 2023 brought Wisconsin up to the U.S. median and restored the wage growth that was interrupted by high inflation in 2022. Hourly wages have grown this fast in only two years – 2019 and 2023 – since 1979. The 2023 wage increase – 97 cents per hour – far outstrips usual increases. Over 1979-2023, the average annual hourly wage increase was just 7 cents.
2023 wage increases largely make up for losses in 2022, when inflation spiked and workers’ pay did not keep up. Though nominal wages rose in 2022, inflation rose more rapidly peaking at 9.1% in June 2022. Both nationally and in Wisconsin, high inflation drove the 2022 purchasing power of the median wage below the 2021 level.
Inflation came down to 3% by mid-2023 and has hovered around this level since. As inflation cooled, wage growth surged, especially in Wisconsin. In Wisconsin, median wage growth was especially strong (from $22.93 to $23.90 over 2022-23). Nationally, wages rose but only slightly: up from $23.82 to $23.98. 2023 median wages in both Wisconsin and the U.S. sit just slightly below all-time highs set in 2021.
In our chapter on Jobs, we document the strong growth in the number of jobs, low unemployment rates, and high rates of employment in the state. Strong labor markets provide workers with leverage to improve their jobs and these wage trends suggest that workers have been doing just that. Most importantly, wage increases since 2020 have reduced inequality in the labor market. Low wage workers and workers of color have seen the strongest wage growth in the years since the pandemic shutdown.
Beyond the Median Wage: 2023 Disparities in Wages for Working Wisconsin
W1 provides a view of inequality displaying the disparity between lower wage and higher wage workers in Wisconsin and the U.S.
The median wage provides information from the middle of the wage distribution, but offers no insight into the distance between higher and lower wage earners. In Wisconsin, the 20th percentile worker (who earns more than 20 percent of the workforce, and less than 80 percent) earns $16.02 per hour. Near the top of the wage distribution, the 80th percentile worker earns $38.52, more than twice as much per hour as the 20th percentile worker. That disparity is substantial but slightly lower than the national gap between 20th and 80th percentile wages.
In 2023, the national 20th percentile wage hit an all time high while Wisconsin’s 20th percentile wage reached near the high set in 2020 ($16.38).
W2 illustrates the stark difference in wages based on race, ethnicity, and gender in Wisconsin and the U.S.
With a median wage of $26.88 per hour, white men earned the most of all demographic groups. White women earned about 16% less than white men at $22.48 per hour. Black men and women earned roughly the same hourly median wage of $19.96 and $20.04 respectively, about 25% percent less than white men. Hispanic men earned $18.19 while Hispanic women earned $18.02. These wages are 32% and 33% lower than white mens’ median.
Raising the Minimum Wage in Wisconsin Would Help Close the Racial and Gender Pay Gap
Since 2009, Wisconsin’s minimum wage has been stuck at the federal level: $7.25 an hour. Raising the minimum wage to $15 per hour would not only be politically popular but would directly or indirectly raise the wages of 231,800 (or 18%) of women workers, 36,200 (or 25.6%) Black workers, and 50,200 (or 26.6%) Hispanic workers in the state. Read more about the potential benefits of a higher minimum wage in our report Can’t Survive on 7.25.
W3 demonstrates the continued importance of college completion for workers’ wages in Wisconsin.
In 2023, workers who had received an associate’s or bachelor’s degree earned wages above the state median. Working Wisconsinites with bachelor’s degrees or more education earned $33.19 per hour, while those with associate’s degrees earned $24.92. Completing a two- or four-year college degree is associated with stronger wages, but just attending college without completing the degree has almost no effect. The wages of Wisconsinites with some college but no degree, $19.91, are actually lower than wages of workers who ended their education with a high school degree (median wage $20.00). Workers without a high school diploma earned a median wage of just $15 per hour.
2019-2023 Wages: Wages Have Grown After Pandemic Shutdowns
W4 shows the changes in median wages in the U.S. and Wisconsin from 2019 to 2023. (All values are expressed in 2023 dollars which allows us to compare the actual purchasing power of wages.)
From 2019 to 2023, median wages grew in the U.S. and Wisconsin. Over the past four years, national median wages have increased from $23.11 to $23.98 and Wisconsin wages grew at the same pace, from $23.00 to $23.90.
Wage growth was interrupted in 2022, when wages fell due to inflation. But strong economic growth and tight labor markets have supported wage increases across recent years. The current wage growth trajectory was established in 2015 with strong growth disrupted by the pandemic and inflation. Even taking the wage setback in 2022 into account, the wage trajectory of the last 9 years is, along with the late 1990s, the period of strongest wage growth dating back to 1979.
2019-2023 Wage Growth Narrows Inequality
W5 shows the percentage change from 2019 to 2023 in wages for workers at the 20th, 50th, and 80th percentiles in both Wisconsin and the United States. (Inflation is taken into account so these are changes in the purchasing power of wages.)
In a notable departure from the trend of increasing inequality of wages in previous decades, lower wage workers have secured the strongest wage gains from 2019 to 2023. This is true for lower wage workers across the nation and in Wisconsin.
From 2019 to 2023, wages of higher wage workers (workers who earn more than 80 percent of the workforce) grew modestly – Wisconsin wages are up less than 1% and national wages are up 2.5%. For lower wage workers (who earn more than 20 percent of the workforce) wages grew much more rapidly, surging 8.4% nationally and 8% in Wisconsin.
In the last four years, wage increases for lower wage workers are more than three times faster than higher wage workers’ gains. Lower wage workers have seized the opportunity provided by tight labor markets and moved to higher paying jobs and secured higher wages in jobs that they stay in. As a result, our wage distribution is more equal today than it was in 2019.
2019-23 Wage Trends Reduce Racial Wage Disparities
W6 shows the change in median wages by gender, race, and ethnicity in Wisconsin and shows a reduction in the pronounced racial and ethnic wage disparities in the state.
Wage trends over 2019-23 have reduced racial and ethnic pay gaps in Wisconsin.
While wages grew for all workers over the last five years, Black and Hispanic women experienced especially strong wage growth. Since workers of color are overrepresented in lower wage work, the gains these workers saw since the pandemic disproportionately benefited women of color.
Longer Term Trends: Economic Growth Leaves Workers Behind
Up to this point, we have focused on short-term wage trends which relate directly to the strong demand for workers that has characterized the last four years. But these recent years of strong and equalizing wage gains are just the most recent part of the story. In the State of Working Wisconsin, we have long documented that longer term trends in workers wages and inequality are deeply concerning. Four years of better news is to be celebrated, but the longer term wage trends tell a different story.
The underlying problem is shown in W7: despite substantial productivity and education advances over the last four decades, median wages have not kept pace. Workers do not experience enough of the rewards of economic growth.
The separation of growth and wages emerged in the 1970s. From the end of World War II until the 1970s, median wages were closely linked to economic growth. As the economy grew and productivity increased, workers’ wages grew roughly at the same rate. This was an era of “shared prosperity” when median wages grew along with economic growth.
By the late 1970s, productivity and wage growth diverged. Since 1979, productivity is up nearly 65% while workers hourly pay has increased by less than 15%. Despite strong wage growth over the past five years, economic growth in this period has not translated into widely shared prosperity. Instead, the lion’s share of the rewards of this growth have gone to the rich while working people have been left behind.
W8 displays median hourly wages for Wisconsin and the United States from 1979 to 2023. (All values are expressed in 2023 dollars which allows us to compare the actual purchasing power of wages.)
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 U.S. median.
Wisconsin returned to the national median wage in 1995 and from there, wages rose slowly until 2005. The Great Recession brought wages in the State to the 21st century’s low point in 2012.
Wages grew slowly from 2012 until 2018 during the sluggish recovery from the Great Recession, then grew at a rate not seen in nearly two decades from 2018 through 2021. In 2022, wage growth temporarily failed to keep up with high inflation, bringing nearly a decade of wage growth to an end.
However, 2023 saw a return to near historic highs in Wisconsin and the country as inflation receded and wage growth remained strong.
Median wages, while important, fail to capture the whole story of working people’s wages in Wisconsin. Below we explore the trends in racial and gender inequality to better understand how working women and men of color have fared over the past four decades.
Wisconsin’s Women Make Strong Gains Over 40 Years, But Substantial Racial and Gender Wage Inequality Continues
W9 and W10 demonstrate that since 1979, women’s wages have grown while men’s wages have fallen.
Since 1979, all workers have seen their wages increase by 16%. However, these gains have not been consistent across demographic groups. Over this period, women’s wages have increased by 28% while men’s have fallen by 8.1% .
The gains in women’s wages have been driven by white women who have seen an astounding 43% growth, with strong growth for Hispanic and Black women at 38% and 14%, respectively.
On the other hand, the decline in men’s wages from 1979 levels have been most dramatic for Black and Hispanic men. While white men saw their median wage decline 2% from 1979 levels, Black men’s median wage has declined 15% and Hispanic men have declined 12% over the same period.
