CONNECTICUT WAGE CHANGE By Sean Patrick
T
he data set is built using data gathered from the U.S. Bureau of Labor Statistics, State Occupational Employment, and Wage Estimates. The data set is a multivariate annual data set of all occupations by state, year, employment (the estimated total employment rounded to the nearest 10 excludes self-employed.), employment RSE, mean wage RSE (Relative Standard Error (RSE) is a measure of the reliability of a statistic, the smaller the relative standard error, the more precise the estimate), mean hourly wage, mean annual wage, yearly percent change in hourly mean wage, and yearly percent change in annual mean wage. The purpose is to report on nominal mean wage change in Connecticut from May 2006 to May 2020, specifically looking at the prerecession conditions.1
The current growth target for nominal wages is 3.5% to 4%, which is the national growth target based on the Federal Reserve’s 2% price inflation goal and the 1.5% to 2% productivity growth goal. The actual national change in nominal wages is 3.0% as of February 2020.2
Figure 10: Connecticut Yearly Percent Change in Hourly Mean Wage
12
CONNECTICUT ECONOMIC ACTIVITY REPORT • SUMMER 2021
Before the Financial Crisis of 2008, from May 2007 at 3.710% to May 2008 at 3.883%, Figure 10 demonstrates that the change in mean hourly wage was increasing. Further, it was meeting the growth target, between 3.5% and 4.0%. When the effects of the GFC hit wages there was a steady decline from 2008 that bottomed out in 2014 at 1.185%. It was not until the period of May 2019 to May 2020 that mean hourly wage recovered to and surpassed the pre-2008 recession levels. From May 2019 to May 2020, change equaled 4.937%, which is an impressive gain compared to the national target of 3.5% to 4.0%. It is noteworthy that there was a significant decline of 124,230 in Connecticut’s total employment from May 2019 to May 2020, which could have had some effect on the overall change of hourly mean wages between that period. Wage change, especially if there is a significant positive change, is a good indicator of the financial health of a state. If there is evidence of increasing wages in a state compared to other states, it might
