The current economic expansion, now the longest in post-war history, certainly looks rosy on the surface: since 2008, Washington has added nearly 479,000 nonfarm jobs, and average hourly wages have climbed 22.6 percent after adjusting for inflation.[1]

But while more people have jobs compared to a decade ago, wage gains have largely accrued to a relatively small group of people working in a select few economic sectors. For everyone else, wage growth has been sluggish – at best. That doesn’t bode well for the next (inevitable) economic downturn.

Let’s put the current economic expansion into context. Despite the long boom, most Washington workers haven’t made real economic gains in decades. Since 1979, hourly wages for the bottom 60 percent of workers have increased $1/hour or less (about 4.3 percent), despite the fact that overall economic productivity climbed 53 percent.[2] Nearly all of the economic gains of the past 40 years have gone to the top 30 percent of workers.

In most of Washington’s biggest employment sectors, wage gains since the Great Recession have been meager.[3] In the state’s nine largest sectors – which comprise 73 percent of all nonfarm employment and have contributed nearly 7 in 10 new jobs since 2008 – average wages have increased just $978, or 1.9 percent, annually. But that actually overstates the wage gains being made by most workers.

Above-average wages in Nonstore retail (think Amazon) account for just 1.5 percent of the state’s total jobs in 2018, but 25 percent of that overall wage increase. Excluding Nonstore retail, average wages have increased just $726 (1.4 percent) annually since 2008. Meanwhile, in the state’s manufacturing sector, outside of aerospace (where wages are above average but employment growth is basically flat), wages are below average, and there are 3450 fewer jobs than at the start of the Great Recession.

Job and Wage Growth: High Employment Sectors

Sources: 1) Employment Estimates (WA-QB, not seasonally adjusted) through December 2019 (preliminary), and 2) Covered Employment (QCEW) through June 2019 (preliminary), shown as annualized four-quarter rolling averages, with wages expressed in 2019 dollars using CPI-U-RS (estimated). *2018-19 Retail Trade (less Nonstore retailers) and Nonstore retailers wage data is estimated based on overall sector trends.

Meanwhile, a handful of high-wage job categories have been reaping most of the gains of a growing economy.[4] Four sectors (Professional, Scientific, and Technical Services; Information; Finance and Insurance; and Management of Companies and Enterprises) — which together comprise just 15 percent of nonfarm employment — have seen annual wage increases averaging $3,634 (3.8 percent) since 2008. Wage increases in Software Publishing, which accounts for just under half of all Information sector jobs, are particularly outsized, averaging $9,133 (5.3 percent) per year.

Job and Wage Growth: High Wage Sectors

Sources: 1) Employment Estimates (WA-QB, not seasonally adjusted) through December 2019 (preliminary), and 2) Covered Employment (QCEW) through June 2019 (preliminary), shown as annualized four-quarter rolling averages, with wages expressed in 2019 dollars using CPI-U-RS (estimated). 2018-19 Retail Trade (less Nonstore retailers) and Nonstore retailers wage data is estimated based on overall sector trend.

Sluggish wage growth and massive economic inequality aren’t the only economic headwinds facing Washington’s working families. Even after adjusting for inflation, costs are going up for critical needs like rent (or home ownership), health care, child care, and higher education. And to top it off, Washington’s low- and middle-income households pay a far higher share of their income in taxes than do those with higher incomes.

These trends aren’t just making everyday life a struggle for people – they’re making it impossible for many Washington households to build even a modest measure of economic security.

It doesn’t have to be this way. During the 2020 legislative session now underway, state and local leaders have the chance to make reforms that a) make Washington’s tax system more equitable, and b) promote increased investment in public policies that build and protect economic security for our families and communities. That includes: ramping up construction of affordable housing, tamping down out-of-pocket costs for health care, lowering the cost of child care by increasing subsidies for providers, teachers and families, and reducing tuition for public higher education, to name just a few!

Otherwise, when the next recession comes — as it inevitably will — it’s going to hit harder and hurt more than it needs to.

[1] Based on EOI analysis of Washington State Employment Security Department data: 1) Employment Estimates (WA-QB, not seasonally adjusted) through December 2019 (preliminary), and 2) Covered Employment (QCEW) through June 2019 (preliminary), shown as annualized four-quarter rolling averages, with wages expressed in 2019 dollars using CPI-U-RS (estimated).

[2] “Wages” include only hourly or salaried remuneration to employees.

[3] Wage and job figures for high-employment sectors based on EOI analysis of Washington State Employment Security Department data: 1) Employment Estimates (WA-QB, not seasonally adjusted) through December 2019 (preliminary), and 2) Covered Employment (QCEW) through June 2019 (preliminary), shown as annualized four-quarter rolling averages, with wages expressed in 2019 dollars using CPI-U-RS (estimated).

[4] Wage and job figures for high-employment sectors based on EOI analysis of Washington State Employment Security Department data: 1) Employment Estimates (WA-QB, not seasonally adjusted) through December 2019 (preliminary), and 2) Covered Employment (QCEW) through June 2019 (preliminary), shown as annualized four-quarter rolling averages, with wages expressed in 2019 dollars using CPI-U-RS (estimated).