KEY TAKEAWAYS
  • National employment is projected to have grown 1.7% in 2019, slightly below the 1.9% rate in 2018
  • Highest employment growth in 2019 is expected in Florida, Texas, and several Western states
  • Wages are projected to have grown 4.0% in 2019, up from 3.4% in 2018, but more slowly in the Midwest than other regions
  • Since 2011, virtually all employment growth in the important Trade, Transportation, and Utilities sector has come in Transportation and Warehousing, the subsector with the highest injury frequency
  • For the past several years, wages have grown faster for low-wage workers than for high-wage workers

EMPLOYMENT AND WAGE GROWTH BY STATE AND ECONOMIC SECTOR

ALL Total Private Industry
TTU Trade, Transportation, and Utilities
E&H Education and Health Services
PBS Professional and Business Services
L&H Leisure and Hospitality
MFG Manufacturing
FIN Financial Activities
CON Construction
OTH Other Services
INF Information
NRM Natural Resources and Mining

As in prior years, we review 2019 employment and wage growth by state and sector.Since final data for the full year 2019 are not yet available, state and national employment and wage growth for 2019 are estimates from Moody’s Analytics.Economic sectors are briefly described here We also discuss an intriguing recent development in the labor market: For the past several years, wages have risen faster for low-wage workers than for high-wage workers.

Employment Shares by State and Sector

Table 1 shows estimated shares of private employment by stateThe District of Columbia is also included. and economic sector for 2019. States are listed from largest to smallest in terms of total employment. Nationally and in nearly every state,The two exceptions are Nevada and Wyoming. more than half of private employees work in one of the three largest sectors: Trade, Transportation, and Utilities; Education and Health Services; and Professional and Business Services. However, other sectors also have important impacts in states where they have high employment concentrations.

Key Economic Sectors by State

Table 1 also highlights each state’s key economic sectors. We define a key economic sector to be one in which the state’s employment share exceeds the national employment share by at least two percentage points or 50% of the sector’s national employment share in 2019. Each of our 10 economic sectors is a key sector in at least one state, and four are key sectors in at least 10 states.

These four are usually key sectors throughout an area, with several neighboring states sharing the same key sector. These regional concentrations can be easily seen in Figure 1.

Employment by State and Sector

Figures 2 and 3 show employment growth rates by state for 2019 and 2018, respectively. Darker green shading indicates bigger year-over-year employment growth. Moody’s forecasts highest 2019 employment growth in Nevada, Utah, Washington, Idaho, Arizona, Florida, and Texas. These seven states topped the employment growth ranking in 2018 as well. Overall, the shading in Figures 2 and 3 is very similar, indicating similar employment growth in most states for both years.

Nationally, employment is projected to have grown 1.7% in 2019, slightly below the 1.9% growth rate in 2018. Numerical state and national employment growth forecasts for 2019 are presented in Table 2.

National employment growth in 2019 is expected to be fastest in Construction, Natural Resources and Mining, and Education and Health Services. Information is the only sector projected to lose employment. As shown in Table 1, Information accounts for only 2% of overall employment. Among large sectors, employment growth in Trade, Transportation, and Utilities is expected to lag the national average.

Interstate variations in overall employment growth are typically similar across the board for all economic sectors. Consider the seven dark-green states in Figure 2, those with the highest projected employment growth rates for 2019. (These states also appear above the first dashed line in Table 2.) In these states, 83% of sectors experienced employment growth greater than the countrywide average for that sector. Only 46% of sectors in the next-highest group and 30% of sectors in the two lower groups experienced above-average employment growth.

The largest changes in percentage employment generally come from small sectors in small states. This can be seen in the increased prevalence of darker shading, both green and red, on the right side of Table 2. Most of the largest changes occur in Construction, Information, and Natural Resources and Mining. Several Western states, including Nevada, Arizona, Alaska, Wyoming, and New Mexico, experienced high Construction employment growth in 2019.West Virginia’s Construction employment growth (and negative wage growth) is not found in the more comprehensive Quarterly Census of Employment and Wages (QCEW) and thus appears to be mostly due to sampling error. For this reason, we shaded it differently from the rest of Tables 2 and 3. No other state-sector combination has a similar discrepancy with QCEW employment growth for early 2019.

Wages by State and Sector

Figures 4 and 5 show growth in average weekly wages by state for 2019 and 2018, respectively. Numerical state and national wage growth forecasts for 2019 are in Table 3. Nationally, wages are projected to have grown 4.0% in 2019, up from 3.4% in 2018. Wages are projected to increase in all states, and 40 out of the 50 states are expected to experience faster wage growth in 2019 than in 2018.

Figure 4 shows that wage growth in the Midwest has been slower than wage growth in states along the coasts and in the Mountain West. For 9 of 12 Midwestern states, 2019 wages are forecast to increase by 3.8% or below.

Table 3 shows projected 2019 wage growth for states overall and by individual sectors. Wages are growing faster in small sectors. Professional and Business Services is the only one of the five largest sectors with above-average projected wage growth, 5.0%. In contrast, all smaller sectors except Other Services experienced 5.0% wage growth or larger.

Sectors also differ in how much wage growth varies across states. This is visible in Table 3’s shading. Wage growth is most consistent from state to state in Trade, Transportation, and Utilities and Education and Health Services. Thus, even though these sectors are large, they do not drive much of the state-to-state variation in wage growth. Professional and Business Services varies far more and is much more strongly correlated with a state’s overall wage growth. Construction’s wage growth has the highest standard deviation across states and is the most strongly correlated with state overall wage growth of any sector.

Employment, Wages, and Injury Frequency in Trade, Transportation, and Utilities

Trade, Transportation, and Utilities is an important sector to understand. It employs more workers than any other sector but is growing more slowly than other large sectors. Digging deeper, we find that Trade, Transportation, and Utilities comprises several distinct subsectors with different employment trajectories, injury frequencies, and wages.

In descending order of employment, Trade, Transportation, and Utilities’ four subsectors are:

Figure 6 shows annual employment growth for each subsector. Transportation and Warehousing has been the key driver of overall employment growth since the Great Recession. During this period, employment growth has accelerated in Transportation and Warehousing, while employment growth in the Retail and Wholesale Trade subsectors has stalled entirely. In 2018, the latest full year, Transportation and Warehousing employment rose by over 5%, while both Retail and Wholesale Trade lost jobs.

The shift in employment toward Transportation and Warehousing impacts injury frequency because this subsector has a much higher rate of workplace injuries than the other subsectors. In 2018, Transportation and Warehousing workers suffered 208 days away from work cases per 10,000 full-time equivalent (FTE) employees. Retail and Wholesale Trade had only 108 and 100 cases per 10,000 FTE, respectively, and Utilities only 66 per 10,000 FTE.

However, the changing composition of employment among subsectors is not a major factor for wage growth in Trade, Transportation, and Utilities overall. Transportation and Warehousing workers have close-to-average wages for the sector—much higher than Retail Trade workers but lower than Wholesale Trade or Utilities workers. If the mix of workers had remained constant between subsectors, year-by-year wage growth in Trade, Transportation, and Utilities would have changed by less than two tenths of a percentage point each year. For example, in 2018 this would have lowered sector wage growth from 3.2% to 3.0%.

Wage Growth for Low and High Earners

Since 2016, wage growth has generally been faster for low-wage workers than for high-wage workers. This is a reversal of the early part of the post-Great Recession recovery, when high earners experienced faster wage growth. Figure 7 shows a three-year moving average of growth in usual weekly earnings measured for workers at the 25th, 50th, and 75th percentiles of the wage distribution (top of the first quartile, median, and third quartile). Until 2017–2018, wage growth was higher for 75th percentile workers than for those at the median or 25th percentile in virtually every year since 2000.The three-year moving average for 25th percentile wage growth exceeded 75th percentile wage growth by one-tenth of a percentage point in 2007–2008. The three-year moving average for median wage growth exceeded 75th percentile wage growth by one-tenth of a percentage point in 2011.

Other data show similar patterns. The Bureau of Labor Statistics’ Employment Cost Index shows faster hourly wage growth for high earners in 2011–2015 but faster growth for low earners from 2016–2019. This matches the result in Figure 7. This similarity between hourly and weekly earnings suggests that increased wage rates for low earners drove their faster average weekly wage growth since 2016, rather than changes in the average number of hours worked. Calculations by Indeed.com’s Hiring Lab show that this result also holds at an industry level, not just in aggregate. Since 2016, low-wage industries have had higher wage growth than medium and high-wage industries.

Wage growth can impact workers compensation differently depending on how it is distributed among workers. First, low-wage workers have higher rates of workers compensation claims than high-wage workers. NCCI research has found that in most jurisdictions where NCCI provides ratemaking services, the average weekly wage for injured workers is 10–30% lower than the state’s overall average weekly wage. Second, due to state maximums for wage replacement, total benefits paid to injured workers will be less responsive to wage growth for high-wage workers than for low-wage workers. In 2018, the 75th percentile average weekly wage for full-time workers was $1,407. In most states, this wage places a worker near or above the maximum weekly benefit level.

Both factors suggest that indemnity payments will rise faster than average wage growth if wages continue to grow faster for low-wage workers than for high-wage workers in the future.