Wisconsin leads the nation in wage growth, but there’s nuance in the numbers

The average hourly wage in Wisconsin was $33.48 in June. A year earlier, it was $30.93. The year-over-year increase of 8.2% was the second largest jump of any state in the country, according to data from the U.S. Bureau of Labor Statistics.

It wasn’t just a one-month occurrence either. Average the increases for the first half of the year and Wisconsin ranks first; the state ranks second when averaging the past three months.

“There’s still just the undercurrent of we don’t have enough folks and the way to get them is money still matters,” said Jim Morgan, vice president of business development and workforce strategies at Waukesha-based employer association MRA.

By the numbers, the job market is still tight. Wisconsin’s unemployment rate was 2.9% in June. It’s been around historic lows, ranging between 2.7% and 3.4%, since late 2021. The state’s total labor force in June was around 3.14 million people, up just 0.7% from where it was prior to the pandemic.

At the same time, the job and labor market in Wisconsin has cooled some since the Great Resignation period in 2021 and 2022.

The number of people quitting their jobs each month in Wisconsin reached as high as 91,000 in April 2022. This past April, there were 75,000 quits. Job openings have fallen, too, from a high of 268,000 in November 2022 to 172,000 as of April, the most recent data available.

Lori Malett, president of Milwaukee-based Hatch Staffing Services, said wage growth has tempered. A few years ago, employers were regularly offering double digit wage increases to entice candidates to change jobs, but now that figure is more likely around 6.5% to 8%.

She did say employers have trended toward giving larger increases to employees staying in their role, partially due to inflation and increases in the cost of living. If those increases were around 2.5% or 3% in the past, now they are coming in closer to 5.5%, Mallet said.

Even with strong wage gains on average for Wisconsin, Mallet said there is a mismatch between what employers are offering and what candidates want.

“So many job seekers or candidates in the market, they’re still thinking in their mind they should be getting those double digit increases to make a move,” Mallet said.

To counteract that mismatch, Mallet said Hatch is often talking with candidates early in the process about their understanding of the market and expectations for a wage increase.

“We have it at that initial phone screen. We’re not even at the interview phase,” Mallet said. “And then we’re already starting to say, ‘OK, you know what? That’s not the market we’re in and if moving jobs right now is ultimately just to get a huge increase in salary, this is not going to be a good fit for you because we know our clients aren’t going to budge.’”

In 2022 and early 2023, Hatch’s clients had so much demand they were willing to go to great lengths to find new employees.

“Well, demand is fairly light right now and most employers can get by a little bit longer without than what they could a year ago,” Mallet said.

Ryan Festerling, chief executive officer of Brookfield-based QPS Employment Group, echoed the sentiment that wage growth had tapered off. He said management and human resource teams were at “code red” to keep hiring as the economy emerged from the pandemic.

“Now that they’ve had some time to breathe, they know that if they continue to create a great culture, they don’t have to keep throwing money at it.”

Economic uncertainty is also translating to the candidate side as well.

“The average candidate is asking more questions about the stability of the organization, their ability to sustain a downward trend,” Festerling said, noting candidates are looking for other jobs when they are unsatisfied in their role, “but they are being very cautious about actually jumping ship.”

Wisconsin’s wage gains aren’t quite as strong when looking at weekly wages, where the average in June was $1,111.54, up 8.2% from a year earlier and the seventh largest increase in the country. The average increase for the year is 6.9%, good enough for third in the country.

However, wage gains in the state have not been evenly distributed by industry or across geography.

For the second quarter, four metro areas – led by Eau Claire at 18% – outpaced the average hourly wage increase statewide of 7.8%. Sheboygan, Oshkosh-Neenah and Appleton were the others.

The state’s two largest metro areas, Milwaukee and Madison, saw average increases of 2.1% and 1.3%, respectively, with Racine and Green Bay essentially flat.

By industry, only the private education and health sector, which averaged a 16.1% year-over-year increase, is outpacing the overall private sector.

The financial activities sector is just behind the state average at 7.3% and leisure and hospitality averaged a 6.7% increase. Manufacturing increased 5.1% on average and construction was up 4.2%.

Within manufacturing, however, there is divergence in wage trends across workers. For production workers in Wisconsin, the average increase in hourly wages for the past three months is 4.4%, suggesting non-production workers have seen increases much larger than the industry average.

Compounding matters for production workers, their average weekly hours have decreased year-over-year, dipping as low as 35.3 in January. For the second quarter, production workers averaged 38.6 hours per week, down from 39.6 a year ago, 40.2 in 2022 and 41.9 in 2021.

Slower hourly wage growth and declining hours have added up to a year-over-year decrease in average weekly wages for production workers in the first four months of the year. May saw an increase of 1.7% and June was up 6.2%. The average increase in weekly wages for the second quarter was 1.9%.