What’s happened to Durham-Chapel Hill’s Average Wage?

Monday, December 10, 2018
Jeff DeBellis

One of the interesting things about working in LEAD is that we often are asked to explore aspects of North Carolina’s economy that we might not think to initiate on our own.  In that process of data analysis and research, we sometimes stumble on issues we may have overlooked or never bothered to consider.  Such is the case when recently exploring metro area wages.  It’s no secret that wage growth has been tepid since the Great Recession ten years ago.  But when we think of areas of growth vs decline or stagnation, most assume the largest wage growth in NC exists in the two largest regions – Charlotte and the Triangle.

The data show this not to be true.  Surprisingly, the Durham-Chapel Hill MSA, has had the second-lowest rate of average wage growth among state metropolitan statistical areas over the past 10 years, after adjusting for inflation.  The Durham-Chapel Hill region experienced a just a 2.2% increase in real wages since the second quarter of 2008 and a decline of 4.7% from its peak in 2011.

It is not for a lack of jobs – the Durham-Chapel hill MSA was the 5th fastest growing job market in the state from 2Q 2008 to 2018.  It’s not for a broad decline in industry wages – all but two industry sectors experienced real wage growth.  So, how could one of our state’s shining examples of wealth and economic progress end up with lower wages than prior to the Recession?

The culprit lies largely in changes to the MSA’s industry composition.  The Durham-Chapel Hill MSA’s Manufacturing industry had an average weekly wage of nearly $1,870 as of the 2nd quarter 2018 (or $97,000 on an annualized basis) – more than any other NC MSA by almost $80 per week.  Steep job losses in Durham’s high-paying Manufacturing industry (particularly computer/electronics products and chemicals/ pharmaceuticals), offset by growth in lower-paying sectors like Accommodations & Food Service and Education, had a negative impact on the region’s total average wage.  In the second quarter of 2008, Manufacturing accounted for 14.9% of jobs in the Durham-Chapel Hill MSA’s.  By 2Q 2018, that percentage was down to 9.2%.  If Durham’s employment was distributed among its industry sectors as in 2008, its 2Q 2018 average weekly wage would have been $41/week higher (a 3.5% increase over the actual); and the growth rate from 2q 2008 to 2018 would have been 5.8% instead of 2.2%. 

Despite the weak growth in average wage, there’s a lot of positives about the Durham-Chapel Hill economy. Wages are still higher than all other NC metros; unemployment is among the lowest in the state; and job growth is solid. However, NC’s economy is constantly changing.  A lot can be missed relying on assumptions about trends and conditions, even in prosperous markets.