American Cities Where Wages Are Plummeting

The average U.S. worker was paid $1,000 per week as of the fourth quarter of 2012. This is, according to the Bureau of Labor Statistics, a 4.7% increase from 2011.

In the vast majority of U.S. metropolitan areas, wages grew. In San Francisco, for one, the average wage grew by nearly 25%. In other cities, however, wages continued to fall. Eight cities had a decline of at least 1% weekly wages. In the Anniston-Oxford, Alabama area, wages fell by 2.4%. Based on the BLS’ quarterly census of employment and wages, these are the cities with the biggest declines in pay.

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One common criticism of the recovery is that even as unemployment has declined nationally, wage inequality has risen. According to a report by the National Employment Law Project, the increase in inequality is because many people who were unemployed during the recession have accepted lower-skill and lower-pay jobs than the ones they previously had in order to make ends meet.

One reason wages are falling in these cities may be that they are still experiencing the effects of continued high unemployment. While the U.S. unemployment had dropped to 7.8% by December 2012, it was much higher in the majority of these metro areas. In six of the 10 cities, the rate was at least 9%. In four of these metro areas, the rate was over 11%.

Several cities on this list had significant increases in the lower-paying leisure and hospitality industry. In Rocky Mount, North Carolina, leisure and hospitality was the only the job sector that grew between December 2011 and December 2012.

Two of these areas — Ocean City and Atlantic City — were hit hard by the hurricane. BLS chief regional economist Martin Kohli explained that businesses in a variety of sectors shut down for several weeks in November. Because the hourly weekly wage is affected by how many hours people worked in a week, he noted that the hurricane might explain a short-term-decline in average wage.

At the same time, these cities are losing jobs in typically higher-paying industries. In many of the metro areas with declining wages the number of people employed in professional and business occupations, for example, also fell. In the Kennewick-Richland-Pasco, Washington, metro area, the number of people employed in professional and business services fell by 7.9% between the end of 2011 and the end of 2012.

Many of these metro areas may also have a declining average wage because government programs are ending. For example, at the end of 2012 Kennewick lost many of the jobs created during the 2009 federal stimulus package.

Based on the BLS’ quarterly census of employment and wages, 24/7 Wall St. reviewed the 10 metropolitan areas with the biggest declines in average weekly wages between the fourth quarter of 2011 and the fourth quarter of 2012. 24/7 Wall St. also reviewed changes in employment by job sector and unemployment rates, both from the BLS, between December 2011 and December 2012.

These are the cities where wages are plummeting.

10. Santa Cruz-Watsonville, Calif.
> 1 yr. wage growth: -0.8%
> Average weekly wage: $849
> Dec. 2011 unemployment: 13.0%
> Dec. 2012 unemployment: 11.2%
> 1 yr. employment change: +7.8%

The average wage per week in the Santa Cruz metropolitan area was $849 in the fourth quarter of 2012, down slightly from $856 a year prior. Although employment grew by 7.8% between December 2011 and December 2012, much of the growth was in lower-paying fields. The leisure and hospitality industry, a low-paying occupation and one of the larger private industries in the Santa Cruz area, grew by 11.7% during that time. Other prominent industries that pay generally higher wages grew at far smaller rates. For instance, employment in the education and health services grew by less than 1%.

9. Sandusky, Ohio
> 1 yr. wage growth: -0.8%
> Average weekly wage: $701
> Dec. 2011 unemployment: 8.6%
> Dec. 2012 unemployment: 7.3%
> 1 yr. employment change: -1.7%

Unemployment in Sandusky fell from December 2011 to December 2012, but this was due to a shrinking labor force. In fact, the number of non-farm jobs in the metro actually area fell 1.7% between December 2011 and the same month in 2012. This included a drop in the number of jobs in generally higher paying industries such as business services and manufacturing. The number of people working in the lower-paying leisure and hospitality industry, however, increased by 3.4% in December 2012 from December 2011.

Also Read: What Americans Do When Not at Work

8. Ocean City, N.J.
> 1 yr. wage growth: -1.1%
> Average weekly wage: $737
> Dec. 2011 unemployment: 16.3%
> Dec. 2012 unemployment: 17.3%
> 1 yr. employment change: +6.5%

Ocean City is one of just eight metropolitan areas where average weekly wages declined by more than 1% from the fourth quarter of 2011 to the fourth quarter of 2012. Despite employment growing by 6.5% between December 2011 and December 2012, a jump in the number of people coming back into the labor force pushed the unemployment rate up an entire percentage point during that time period. Ocean City was hit hard by Hurricane Sandy, which likely led to an increase in unemployment in late 2012.

7. Las Cruces, N.M.
> 1 yr. wage growth: -1.2%
> Average weekly wage: $678
> Dec. 2011 unemployment: 7.0%
> Dec. 2012 unemployment: 6.7%
> 1 yr. employment change: -1.0%

The average weekly wage of $678 in Las Cruces in the fourth quarter of 2012 was at its lowest point since 2008. Much of the wage decline could be due to increases in lower-paying jobs in lieu of higher-paying ones. The public sector, the largest in the Las Cruces area and generally higher paying, shrank by 4.1% from December 2011 to December 2012. The largest private industry, the generally lower-paying education and health services, grew its job count by 3.1%.

6. Kennewick-Richland-Pasco, Wash.
> 1 yr. wage growth: -1.3%
> Average weekly wage: $894
> Dec. 2011 unemployment: 9.9%
> Dec. 2012 unemployment: 9.7%
> 1 yr. employment change: -1.1%

The 1.3% wage decline from the fourth quarter of 2011 to 2012 was actually less severe than in previous quarters. From the third quarter or 2011 to the third quarter of 2012, average weekly wages dropped by 7.1%. The Kennewick area experienced a spike in unemployment last year due to the completion of several stimulus projects. Some of these lost jobs were in higher-paying occupations, likely contributing to the overall wage decline in 2012. For example, professional and business services lost 7.9% of jobs in 2012 compared to 2011.

5. Flint, Mich.
> 1 yr. wage growth: -1.4%
> Average weekly wage: $816
> Dec. 2011 unemployment: 9.8%
> Dec. 2012 unemployment: 9.1%
> 1 yr. employment change: +0.1%

Although the unemployment rate in the Flint metro area fell 0.7 percentage points between December 2011 and December 2012, the number of people employed in non-farm jobs has remained stagnant. Sectors that are generally higher paying were hit disproportionately harder. The number of jobs in professional and business services, one of the larger sectors in the area in terms of total employment, fell 1.3% from December 2011 to December 2012. Moreover, government payrolls in the Flint area dropped 4.5%. The Flint area has been in economic decline for the last several decades as auto manufacturing has moved out of the area.

Also Read: Cities With the Most Abandoned Homes

4. Atlantic City, N.J.
> 1 yr. wage growth: -1.4%
> Average weekly wage: $816
> Dec. 2011 unemployment: 13.1%
> Dec. 2012 unemployment: 14.9%
> 1 yr. employment change: -2.8%

Atlantic City’s average wages rose 3.8% in the first quarter of 2012 compared to 2011, but then fell in the three remaining quarters of the year compared to the previous one. The unemployment rate jumped nearly two percentage points from December 2011 to December 2012 despite falling in metro areas across the country, compounding the problem of declining wages. Atlantic City was hit incredibly hard by Hurricane Sandy, leaving businesses destroyed and many people in the city’s tourism industry out of work. The number of jobs in the leisure and hospitality industry, the largest in the area, dropped 9% between December 2011 and December 2012.

3. Elizabethtown, Ky.
> 1 yr. wage growth: -1.8%
> Average weekly wage: $752
> Dec. 2011 unemployment: 8.5%
> Dec. 2012 unemployment: 7.3%
> 1 yr. employment change: +1.2%

The $752 average weekly wage in Elizabethtown during the fourth quarter of 2012 was $14, or 1.8% lower than it was in the same quarter in 2011. Jobs in professional services and the public sector declined 2% and 0.7%, respectively, between December 2011 and December 2012. Manufacturing in the Elizabethtown area grew 10.9% during that time.

2. Rocky Mount, N.C.
> 1 yr. wage growth: -2.3%
> Average weekly wage: $689
> Dec. 2011 unemployment: 13.1%
> Dec. 2012 unemployment: 13.0%
> 1 yr. employment change: -1.7%

The average weekly wage of $689 in Rocky Mount at the end of 2012 was the first time the it dropped below $700 since 2008. Although unemployment remained at nearly the same level in December 2012 compared to the year before, the number of non-farm jobs actually declined 1.7%. Employment in the largest sector in the area — trade, transportation and utilities — declined 7.4% in that time. The only industry in the area that grew its job count during that time was the lower-paying leisure and hospitality industry, growing 3.9%.

1. Anniston-Oxford, Ala.
> 1 yr. wage growth: -2.4%
> Average weekly wage: $743
> Dec. 2011 unemployment: 7.3%
> Dec. 2012 unemployment: 6.8%
> 1 yr. employment change: -0.2%

No metropolitan area suffered a greater decline in average weekly wages as Anniston did in the fourth quarter of 2012. The public sector, which often pays higher wages than the private sector, declined 3% during that time. In addition, the number of jobs in trade, transportation and utilities declined by 4.2% during the year. Job cuts and wage reductions are likely to continue in the Anniston area in 2013 as the federal sequestration hits the Anniston Army Depot, which makes up a large share of the area’s workforce.

Also Read: American Cities Where Wages Are Soaring