Since President Trump took office, wages have grown slightly faster in blue states (those won by Hillary Clinton in the 2016 election) than in red states (those won by President Trump)—and from a higher starting point. That’s according to data through November 2019 from the U.S. Bureau of Labor Statistics. While red states may have added more jobs during President Trump’s tenure, as we showed in the first part of this series, blue states appear to have added higher-paying ones.
The difference in wage growth is small, and—given the small sample of 50 states and the District of Columbia—not statistically significant. But there still may be something there. Average hourly wages tend to be higher in blue states than in red states. And the likely driver is differences in human capital. Blue states tend to invest more in schooling and have a distinct advantage when it comes to educational attainment and test scores. Recent research finds evidence that higher state minimum wage laws, which are far more common in blue states, could play a role, too, by boosting wages at the bottom.
While some research argues that states are on diverging paths, it is not always the case that those with higher wage levels experience faster wage growth. On average, blue states enjoyed faster wage growth in 2017 and 2018, but red states have registered faster growth so far in 2019, a year that has seen wages rise more quickly at the bottom than at the top.
Although there is a cluster of high wage-growth states in the southwest, the states where wage growth has been highest are not concentrated in one region or characterized by one industry, but rather have very different characteristics.
Top 10 states* with the highest wage growth during President Trump’s tenure
- Hawaii (15.3%)
- Utah (14.5%)
- Nebraska (14.1%)
- District of Columbia (13.7%)
- West Virginia (13.6%)
- Colorado (13.4%)
- South Carolina (13.0%)
- Arkansas (12.9%)
- Wyoming (11.8%)
- Arizona (11.6%)
The five red states with the fastest wage growth since President Trump’s inauguration have been Utah (14.5%), Nebraska (14.1%), West Virginia (13.6%), South Carolina (13.0%) and Arkansas (12.9%). Utah, in particular, stands out as an economic powerhouse, leading the way in both job and wage growth. The largest increases in employment in Utah have been in health and education, professional and business services, and manufacturing. The state has been a popular destination for job seekers, due to its growing technology hub, known as Silicon Slopes, and its low cost of living.
Hawaii (15.3%), the District of Columbia (13.7%), Colorado (13.4%), Nevada (11.5%), and California (11.4%) are the highest wage-growth areas that voted against President Trump. Three of them, Colorado, Nevada, and California, have also experienced above-average job growth.
The nine states in the top right quadrant of the chart below stand out as having both above-average job growth and above-average wage growth, which makes them attractive destinations for job seekers.
When it comes to job growth and wage growth, FiveThirtyEight’s list of perennial swing states includes some of the top achievers (like Nevada, Colorado and Florida) and some of the lowest (Ohio, New Hampshire and Pennsylvania). It will be interesting to see how the swing states break in the 2020 Presidential Election, and whether their labor market performance has anything to do with it.
