Most workers make about the same as before the pandemic — except in these states

Tim Henderson | Stateline.org (TNS)

The typical U.S. worker’s pay is about the same as it was in late 2019, after accounting for inflation. But workers in some states have seen sharply higher earnings, especially in scenic areas that are appealing to remote workers and have labor shortages.

In Montana, for example, average pay has increased 28.3% since before the pandemic, easily beating the roughly 19% national inflation rate during that time. That translates into an average raise of $260 a week to $1,178. No other state saw such a large gain, according to a new Stateline analysis of data from the Bureau of Labor Statistics. The numbers are from 2023, the latest available.

Montana has drawn remote workers with the beauty of its parks and mountains and has lured blue-collar employees with pay that’s competitive with more expensive areas.

Other picturesque places also have drawn remote workers. Average pay increased significantly in these states, though some of them had relatively low wages to begin with. They include New Hampshire (wages up 28%), Florida (27.3%), Washington (27.2%), Maine (26.7%), Vermont (26.5%), Utah (25.7%), Arizona (24.8%) and West Virginia (24.6%).

Pay increased slightly less than the 19.3% inflation rate in North Dakota (16.8%), Wyoming (17.5%), Connecticut and Michigan (18.1%), New Jersey (18.2%), Maryland and Rhode Island (18.6%), Minnesota and New York (18.9%), and Oklahoma and Pennsylvania (19%).

Nationally, inflation-adjusted earnings increased steeply early in the pandemic as low-wage service workers lost their jobs and employers competed for scarce essential workers. Though wages continued to rise, inflation-adjusted pay started to come down sharply in late 2020 and 2021 as inflation took a bigger bite.

The inflation-adjusted wage spike early in the pandemic was somewhat misleading, both because 20 million low-wage service workers left the workforce temporarily and because prices for some things such as gasoline temporarily plummeted, noted Josh Bivens, chief economist at the left-leaning Economic Policy Institute in Washington, D.C.

As the economic recovery has progressed, workers are doing slightly better, Bivens said.

“On the one hand, all else equal, you’d want better wage growth over four and a half years,” Bivens said. “On the other hand, we suffered a horrible economic shock in that period. Relative to other recessions and recoveries, this is superb wage performance, even with the inflation.”

In 2019, the average weekly wage in Montana was $918, 45th among the states. The latest figure, $1,178, ranks 39th. Montana’s natural beauty has drawn new residents from higher-wage states such as New York and California, and many of those working remotely brought their higher salaries with them.

Competition for workers in Montana has been fierce, driving up wages, as has been the case in other newly popular locations. The highest wage growth in Montana has been for those without a college education, a group that saw some of the highest gains nationwide as restaurants and hotels struggled to recover staff after the peak of the pandemic, said Christopher Thornberg, an economist at Beacon Economics, an economic research and consulting firm, who monitors Montana economic trends.

Montana’s economy is heavily geared toward services, and wages may come down again this year from the unusual spike, Thornberg said. But, he added, “there’s little doubt incomes in Montana are higher than they have been in a while, even with it backing off.”

In Florida, where the wage increase was almost as large as in Montana, competition for workers also has driven up wages, and the unemployment rate has been lower than the national average since 2017, said Hector Sandoval, director of the Economic Analysis Program at the University of Florida’s Bureau of Economic and Business Research.

Florida, like Montana, has also been a magnet for well-paid remote workers from New York in fields like finance, said the bureau’s director, Christopher McCarty.

Meanwhile, wages are stagnating in some large coastal cities that are struggling to maintain well-paying jobs, experts said.

“Coastal cities are especially struggling to add new jobs,” said August Benzow, research lead at the Economic Innovation Group, a bipartisan public policy organization. The group has analyzed the improved fortunes of “left-behind” areas— counties with lagging population and income growth from 2000 to 2016 — that had suffered as well-paying jobs concentrated in large cities.

“On the bright side, left-behind counties — particularly those that are more rural — have rebounded swiftly. It remains to be seen whether these areas will continue to see improved growth rates,” Benzow said.

Stateline is part of States Newsroom, a national nonprofit news organization focused on state policy.