The Illinois Wage Misconception

With a continually struggling economy throughout most of Illinois any statistics that give us hope for future are grabbed and held onto tightly. Unfortunately, this knee-jerk reaction can sometimes be misleading and actually turn out to be quite counter-intuitive. One of these statistics in particular is Illinois’ rather high average wage in comparison to other states in the Midwest.

Specifically, Illinois has the second highest average wage compared to surrounding states in the Midwest.

Figure 1: Midwest Average Wage

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Source: Bureau of Labor Statistics, May 2014, and Illinois Policy Institute

The only state that has a higher average wage than Illinois in the Midwest is Ohio, and by only $700 annually. This particular statistic makes Illinoisians feel good about the current and future prospects of our economy. However, it is unfortunately deceiving. Now look at the next two figures below which illustrates the average wage of the bottom 10% and  25% of earners in the Midwest.

Figure 2: Midwest Average Wage of Bottom 10%

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Source: Bureau of Labor Statistics, May 2014, and Illinois Policy Institute

Figure 3:Midwest Average Wage of Bottom 25%

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Source: Bureau of Labor Statistics, May 2014, and Illinois Policy Institute

What Figure’s 2 and 3 display is that despite our rather high average wage, those who earn a lower than average wage in Illinois are earning much less than their counterparts in the Midwest. Specifically, the bottom 10 and 20 percent wage earners earn the lowest of any of the surrounding Midwestern states. So although at first glance Illinois’ current wage situation seems not only above average, but pretty good in comparison to many other states, it is simply as misconception.

So what makes this misconception occur? The opposite end of the spectrum-the highest wage earners. If the Illinois lower wage earners make less that their Midwestern counterparts, it must be that Illinois’ higher wage earners make much more than their Midwestern counterparts. That would be the only way that Illinois average wage (shown in Figure 1) could compare so well to other Midwestern states.

Figure 4 displays just that, the top 10% of earners in Illinois compared to other Midwestern states.

Figure 4:Midwest Average Wage of Top 10%

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Source: Bureau of Labor Statistics, May 2014, and Illinois Policy Institute

As is shown above, Illinois’ top 10% wage earners out-earn, if you will, all of their counterparts in surrounding Midwestern states, and in many cases by a large margin. This is where that gap among the lowest wage earners is made up.

This is not to say all bad of course, it is undoubtedly a great benefit to the state to have some of the top earners in the entire Midwest region. However, what must be noted is that these jobs are nearly solely made up of white-collar workers. So, what does that mean? It is the blue-collar workers that are suffering from an extreme low wage.

As is discussed by the Illinois Policy Institute’s Michael Lucci, “The industries in which Illinoisans fare worse than the rest of the Midwest are blue-collar…Workers in production, transportation and material moving,and health care support earn less in Illinois than in any other stat in the Midwest.”

This directly impacts the South Central Illinois Region when so many of our residents are blue-collar workers. What this help explain is Illinois’ recent exponential increase in food-stamps enrollment and the fact that the portion of the Illinois population on food-stamps is now higher than any other state in the region. This was discussed in a previous article.

Michael Lucci continues by stating that….”data from the Bureau of Labor Statistics show that the polices that drive out blue-collar industries – such as Illinois’ broken worker’s compensation system, anti-business lawsuit climate and skyrocketing property taxes…..drive down the wages and job prospects of low-income and blue-collar workers.”

Source: Illinois’ low-income and blue-collar workers are the worst-paid in the region, Illinois Policy Institute

Author: Regional Link

Economic Development Planner