America's Best Places for a Raise Since the Great Recession

A couple of weeks ago in light of Labor Day, I wrote about the metros with the highest raises over a one-year period using the most current available data. A number of readers commented that it would be even more interesting to see which metros have done the best over a longer period of time.

With the help of Charlotta Mellander, my colleague at the Martin Prosperity Institute (MPI), I went back and looked at U.S. Bureau of Labor Statistics data on wages from 2006 (before the housing and financial crisis) through 2011 (the most current data available) to provide a reasonable picture of the metros that have done the best since the onset of the crisis. The data cover 368 metros. MPI’s Zara Matheson mapped the data (below).

Map by MPI's Zara Matheson; Data courtesy of the U.S. Bureau of Labor Statistics

The table below lists the top 20 large metros (those with more than one million people) that saw the largest “raises” — the biggest absolute change in wages and salaries — between 2006 and 2011.

Top 20 Large Metros with the Biggest Raises, 2006-2011

Table data courtesy of the U.S. Bureau of Labor Statistics

Greater Washington, D.C. tops the list of large metros with a raise of $10,460. Along the Bos-Wash corridor, Baltimore ranks ninth, New York 11th, and Philadelphia 15th. Metros in Northern California also rank highly. San Jose is second, San Francisco third, and Sacramento sixth. In Southern California, Los Angeles ranks fifth, San Diego 14th, and Riverside 20th. Phoenix, despite being hard hit by the housing crisis, places seventh. Houston, with its oil and natural resources economy, ranks eighth. Austin is 10th, San Antonio 12th, and Dallas 18th, giving Texas four metros in the top 20. In the Rustbelt, Pittsburgh is 13th. Denver is 17th and Tampa 19th.

Among all 368 metros, Champaign-Urbana, Illinois (home to the University of Illinois) saw the highest overall raise over this period, at $11,250. Several other smaller and medium-size metros — quite of few of them college towns — also racked up considerable gains, including Fairbanks, Alaska ($9,480), Corvallis, Oregon ($9,340), Madera, California ($8,950), Bridgeport-Stamford, Connecticut ($8,900), Durham, North Carolina ($8,760), Iowa City, Iowa ($8,750), Midland, Texas ($8,740), Casper, Wyoming ($8,430), Trenton-Ewing, New Jersey ($8,430), Burlington, Vermont ($8,130), Cheyenne, Wyoming ($8,050) and Odessa, Texas ($7,810).

Top 20 Overall Metros with the Biggest Raises, 2006-2011

Table data courtesy of the U.S. Bureau of Labor Statistics

The places with the lowest raises were all smaller metros, mainly in the Rustbelt. Holland, Michigan, saw the smallest increase in wages and salaries, just $1,080. Bay City and Monroe, Michigan; Sandusky, Ohio; Kokomo, Indiana; and Lubbock, Texas, all had wage and salary increases of less than $2,000. Of large metros, greater Detroit saw the smallest increase in wages and salaries, $2,100, between 2006 and 2011.

The economic impacts of the crisis have certainly been uneven, as the map above shows, hitting much harder at wages and salaries in some metros than others. What are the key factors that are associated with the economic resilience of metros over the course of the crisis — that is, their ability to generate relatively bigger gains in wages and salaries for their workers?

To get at this, Charlotta Mellander correlated the change in wages and salaries for metros between 2006 and 2011 and key economic and demographic variables. As usual, I remind readers that correlation does not equal causation but points only to associations between variables. Still, a number of interesting patterns appear.

First and foremost, talent and skills matter. Wage gains across metros are positively associated with key measures of talent and human capital. Metro raises are correlated with both the percentage of adults who are college grads (.28) and even more so with the percentage of the workforce in creative class jobs (.31) in science and technology, the professions and arts, and media and entertainment. Conversely, regional wage raises are negatively associated with the share of the labor force in working class jobs (-.27). Interestingly, regional wage gains have no association to hours worked.

Technology plays a role. Wage gains are positively correlated with the concentration of high-tech industry (.36). They are not however correlated with the level of regional innovation measured as patents per capita.

Wage gains are modestly associated with metro population size (.25), but not with the density of metro regions.

Diversity also factors in. Wage gains are associated with two measures of regional diversity, being positively correlated with both with the percentage of residents that are foreign-born (.36) and the share of the population that is gay or lesbian (.39). It remains unclear from this analysis, however, whether diversity creates regional economic advantage or follows from it. Race, measured as the percentage of the population that is black, has no statistical relationship to regional wage gains.

Despite persistent unemployment and a jobless recovery, virtually all metros have seem some wage and salary gains over the past five years. More than 60 percent (224 metros) saw wage and salary increases of $5,000 or more, while nearly 8 percent (29 metros) racked up wage and salary increases of $7,500 or more. That said, these gains have been geographically uneven, with relatively larger wage and salary increases going to metros with greater concentrations of college grads, larger knowledge and creative workforces, more high-tech industry and greater levels of diversity.