Income on the Stateline
Last fall’s Report noted some signs of hope in the region’s labor market, with employment gains in most counties and increased labor force participation. We now have some weekly wage data to match the period. Any increase in the labor force should theoretically have a mitigating effect on wages. However, this could mean holding down increasing wages in a tighter labor market, or it could mean depressing wages in a static labor market.
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In Table 5 and Figure 5 we have weekly wage data for the first and third quarters for both 2005 and 2006 (the third quarter of 2006 being the most recently available as of this writing). In the table, we can see the percentage change in the third quarter of 2006 income compared to other periods, along with the rate of inflation for Midwest urban consumers which is the closest regional measure available by month or quarter. For most counties, weekly wages have been declining in absolute amounts inflation notwithstanding. Focusing on wages paid by private employers, every county had stagnant or falling wages except for Rock County over the previous half and full years. Even at the state level, nominal wages stayed at least steady through the year to the third quarter of 2006. Particularly large declines in excess of 4 percent occurred in Green and Lafayette counties, though it should be noted the first quarter of 2006 was something of a high-point for Green County wages. Interestingly, it was also these two counties that showed the only gains in public employee wages, with the gains being enough to at least keep pace with inflation.
Walworth and Jefferson counties’ weekly wages showed more moderate declines, about 2.63 percent in Walworth and about half that in Jefferson. Rock County, however, showed significant wage growth. Though slowing some over the summer of 2006, the year to the third quarter of 2006 saw wage gains in Rock County of 8 percent, well over enough to beat inflation. If we look at Rock County employment figures from the last Report, we can see this is certainly coincident with significant tightening of the labor market there, with employment gains at the same time the labor force is contracting suggesting that the demand for workers was increasing while supply was certainly not keeping up, if not decreasing. It would seem this growth was fairly widespread across industries, though it is possible the growth in manufacturing employment was particularly significant if we believe manufacturing wages to be significantly higher than in other sectors.
The story thus far would seem to be a pessimistic one, but it should be pointed out that when looking at trends, the choice of a starting point can do much to influence the message. Compared to the first quarter of 2005, wages were higher in the third quarter of 2006 for all counties but Green. For the rest, the increase was less than a percentage point below inflation for the period (Jefferson and Lafayette), a tad over inflation for Walworth and significantly more than inflation in Rock County.