When we write about the economy, too often writers and analysts (myself, included) write as though there is one national economy moving forward or backward at a single speed. Nothing could be farther from the truth. In a North Dakota boomtown, mining companies are begging for workers, and wages are climbing. In Riverside, where housing prices have fallen more than 50 percent from their 2006 peak, unemployment is kissing 12 percent and wages are still falling.
One of the best ways to visualize the diversity of the U.S. economy is the PayScale Index, which tracks wages by metro and occupation over the last year. Here is the pay growth story by industry (click to enlarge)...
... and by metro (click to enlarge) ...
That's not a typo. According to PayScale, Riverside wages are still collapsing, five years after their housing prices peaked.
To see how pay compared to the national average by city and by industry, we rounded up these graphs, which PayScale kindly shared with The Atlantic. First the graphs, then some analysis and context (Important graph-watching note: The PayScale index measures income growth with a year-2006 base of 100. The fact that LA's line is lower than Houston doesn't mean LA wages are lower than Houston, but rather that Houston wages have grown more since 2006):
Not even these breakdowns capture the full diversity of the multi-speed economy, but they bring into focus a million little parts under the hood of the "national economy," illustrating a few trends we already know:
1) Houston vs. Riverside. Houston is booming. Riverside is still busting.
These are the polar ends of the multi-speed recession, and the story begins with housing. In Houston, where housing prices have fallen 11 percent from their peak in 2009, gross metropolitan product has led the 100 largest metros in the country. By contrast, Riverside, in which housing prices have fallen 55 percent from their peak in 2006, ranks among the ten worst metros in the country in unemployment and GMP change. Houston's reliance on energy has served it well in the last few years, while Riverside's real estate collapse has made it the poster-child of the post-bust depression city.
2) Food services and retail. What does it say about the economy that cheap jobs in food services and retail got even cheaper in the recession? One explanation is that unemployment has been so high among young and under-educated Americans that there's a surplus of desperate workers that could do these jobs. As with anything else, where supply greatly exceeds demand, prices drop. In this case, pay was the price. That leads us to number three...
3) Manufacturing wages had to go down before they went up. You can see in the gallery above that manufacturing wages fell after the Great Recession but have just begun to perk up. This jives well with our understanding of the manufacturing economy. Gutted in the 2000s and again by the Great Recession, manufacturing jobs have actually enjoyed a boomlet in the last two years.
Fully 300,000 of the 2+ million jobs added February 2010 (the nadir of unemployment) have come from manufacturing, and the Institute for Supply Management, which surveys American manufacturers, has been in positive territory for most of the year. One thing that made this boomlet possible is that the fact that manufacturing wages have declined while productivity increased, making U.S. manufacturing more competitive with the millions of factories overseas.
URL to original article: http://www.builderonline.com/builder-pulse/real-estate--and-economics--are-local.aspx?cid=BP:011712:JUMP
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