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Wages and prices in Wisconsin


How does Wisconsin’s wages change relative to the cost of living (measured in CPI)? Hard to say.

The BLS reports average hourly income in Wisconsin, but not Wisconsin. Instead, as described here, the BLS reports the CPI for the Midwest and the North Mideast region (see the discussion in this article) postal). I plotted revenue and CPI and normalized them to the NBER peak of 2020M02:

figure 1: The average hourly earnings of all workers in the private sector in Wisconsin (blue), and the CPI of all cities in the northeastern midwestern region, seasonally adjusted using the author’s census X12 (brown), and the corresponding unseasonally adjusted The official BLS series (light brown), all in logs, 2020M02=0. NBER-defined recession dates are shaded gray from peak to trough. Source: BLS, NBER and author’s calculations.

The cost of living is growing faster than average income. This is in sharp contrast to the national figures:

figure 2: The average hourly income of all workers in the private sector in the United States (blue) and the CPI (brown) of all cities in the United States are displayed in logarithmic form, 2020M02=0. NBER-defined recession dates are shaded gray from peak to trough. Source: BLS, NBER and author’s calculations.

Why is the CPI in the Midwest rising faster than that of the entire country? (The year-on-year inflation rate of the northern Middle East, including Illinois, Indiana, Michigan, Ohio, and Wisconsin, is roughly the same as the inflation rate of the entire Midwest.). Two projects stand out — food and housing costs in the Midwest are about one percentage point higher than the national level — 7.1% and 5.1%, respectively. (CPI statistics for the Midwest here.) The CPI weights of these two components (at the national level) are 14% and 42%, respectively.

A big problem with comparing average hourly earnings is that they do not take into account differences in departments. I show below the evolution of average wages in Wisconsin’s manufacturing and leisure and hospitality industries. Obviously, in the latter case, the increase in wages exceeds the increase in the cost of living (regardless of composition changes).

image 3: The average hourly earnings of all workers in Wisconsin’s manufacturing (blue) and leisure and hospitality industries (purple), and CPI-All cities in the Mid-Northeast Mid-Central Region of the Midwestern Region, using the author’s (brown) census X12 for seasonal adjustment, all in the log, 2020M02=0. NBER-defined recession dates are shaded gray from peak to trough. Source: BLS, NBER and author’s calculations.

It is best to consider changes in the composition of the workforce.You can see by breaking it down that this is important at the national level, just like if you use Atlanta Fed Pay Tracker (Use CPS data). Unfortunately, there are no corresponding adjustments at the state level.



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