top of page
< Back
Pandemic wage gains in New York City’s high-wage industries outpace gains for low- and middle-wage industry workers

Lauren Melodia

24 ago 2023

Pandemic wage gains in New York City’s high-wage industries outpace gains for low- and middle-wage industry workers

Nationally, much attention has been paid to exceptional wage growth taking place during the recovery from the pandemic. Some say it is a positive outcome of a fast and strong recovery, where labor market churn facilitated a better bargaining position for workers. Others view it as a threat to bringing inflation back down. Recently released 2022 Quarterly Census of Employment and Wages (QCEW) data from the Bureau of Labor Statistics provides a first glimpse into this dynamic in New York City. Comparing this wage data by industry, the Center for New York City Affairs finds that average real wage growth (adjusted for inflation) for private sector employees grew at an annualized rate of 2.2 percent from 2019 to 2022; however, this real wage growth was disproportionately experienced by workers in high-wage industries, who averaged 2.5 percent annualized real wage growth during this time period. Meanwhile, workers in New York City’s low- and middle-wage industries experienced 0.5 to 0.6 percent annualized wage growth from 2019 to 2022 when taking inflation into account. In short, low- and middle-income industry workers were generally not able to secure substantial wage increases as a result of the pandemic and inflation in recent years. Instead, high-income workers were better able to leverage their position in the economy.The QCEW data is collected directly from companies’ quarterly reports of unemployment insurance payroll taxes, providing one of the most reliable sources of wage data. However, the data only provides average wages by industry. We examined real wage growth in 40 New York City industry groups, with industries grouped into three categories: low-wage, middle-wage, and high-wage, based on the 2022 average wage in the industry. Some industries are clear outliers. Warehouse workers, for example, experienced 7.2 percent annualized growth in real wages from 2019 to 2022. However, this may be the result of pandemic-related shifts in this sector, with Amazon, for example, replacing old, lower-paying warehouse jobs with new, higher-paying jobs (which also involve more demanding, machine-paced work with higher risk of workplace injury). Strikingly, many industries deemed “essential” during this period – grocery stores, social assistance, hospitals and other medical industries, schools, and government – saw little or no real wage growth (and even real wage decline), even as workers in these industries faced significant employment-related pressures and health hazards.Despite a few outliers, we find one consistent trend: all high-wage industries, such as those in finance, insurance, and technology, experienced strong real wage growth during this period. Notably, these high-wage industries were also the least disrupted by the pandemic and have provided workers with greater flexibility than other industries. See Figure 1 for wage growth comparison by industry group. See Figure 3 for details on each industry. Both compare 2019-2022 (the pandemic period) to 2013-2019 (before the pandemic), for reasons discussed below.

Figure 1

Recent wage growth magnifies already large wage inequalities among low-, middle- and high-wage industry workers in New York City. For example, in 2022 the average low-, middle- and high-wage industry worker annually earned $40,000, $83,000, and $217,000, respectively. The average high-wage industry worker made 2.5 times more than the average middle-income industry worker and 5.5 times more than the average low-income industry worker. As a result, the percentage of wage growth experienced by these workers, who make up less than a third of all New York City workers, translates to a significantly large dollar amount. (See Figure 2.) The average high-wage industry worker saw their annual salary increase by an additional $5,107 every year from 2019 to 2022. Meanwhile, the average low- and middle-wage industry workers saw their annual income increase every year by only $186 and $524. respectively. 

Figure 2

This tremendous real wage growth for workers in high-wage industries and contrasting minimal wage growth for workers in other industries in New York City contradicts much of the national narrative about wage growth during the pandemic. Rather than this being a period of tight labor markets resulting in substantial wage growth for low- and middle-wage workers, the pandemic period provided an opportunity for U.S. companies to distribute record profits to shareholders and to managers and other senior-level employees, in the finance sector and technology companies at the center of the U.S. economy, many employed in New York City.This dynamic disrupted a pre-pandemic trend favoring less well-paid workers, who benefited from strong economic growth and a doubling of the State minimum wage from 2013 to 2019. Examining the same 40 industries, we find the highest wage growth then was experienced by middle-income industry workers, followed by low-income industry workers. Despite strong economic growth during this time, high-wage industry workers experienced the least real wage growth; their annualized yearly raise was $2,639 – much closer in value to the $1,996 annualized average yearly raise middle-income industry workers experienced during this time. (See Figure 2.) The impact of this pre-pandemic real wage growth, sustained over six years, cannot be understated. It produced significant inflation-adjusted income gains for low- and middle-income New York City households and stabilized income concentration in New York City for the first time in decades. Comparing the six years before and the three years during the pandemic demonstrates the importance of government wage policies, such as economy-wide minimum wages or industry-specific wage standards, for boosting wages for low-income workers in particular and for reducing income inequality in the U.S. economy. In fact, recent analysis from the Economic Policy Institute shows that wage growth for low-wage workers during the pandemic is also the outcome of minimum wage policies enacted and implemented in many states across the country. These policies should be aggressively pursued now to offset the income polarization accelerated in the past three years. New York State legislation brought New York City’s minimum wage to $15.00 at the end of 2019. Until recently, however, it had not been adjusted for inflation (which has not been the case in most other states with minimum wages higher than the federal minimum wage). The State’s new minimum wage law enacted this year will increase the minimum wage in three stages to get to $17 per hour by 2026 and then index it to inflation starting in 2026. However, the staged increases, or “catch up,” will not sufficiently address how a 16 percent increase in the average of all price changes (inflation) from January 2020 to July 2023 has eroded the value of the minimum wage. Given the minimal real wage growth among low-wage industry workers identified in the QCEW, the new minimum wage law will not be sufficient to secure past or future real wage growth for these workers and might not even prevent purchasing power erosion from occurring again. New York State can correct the shortcomings of last year’s minimum wage reform by removing unnecessary off-ramps and providing a more sufficient “catch up,” like those outlined in the Raise Up New York bill. Furthermore, the policy of indexing wages to inflation should be adopted in union contracts and by business owners as standard practice to prevent wage compression with other low- and middle-income industry workers, which can moderate income inequality.As numerous private unions negotiate contracts with their employers over the coming months, it is important to discount the narrative that workers have already gotten too big of a share of the income generated by the businesses where they work. Furthermore, in recent years workers have been choosing to form new workplace unions so they have a collective voice in negotiating their pay, but companies like Starbucks and Amazon have been actively undermining efforts to negotiate contracts that produce real wage gains and other job quality improvements. Real wage growth is the result of two things: workers securing higher nominal wages and businesses keeping prices stable. Together, these result in workers having more purchasing power. While workers should feel empowered to demand a higher share of the income generated by the businesses where they work, New York City and New York State can also enact policies that help contain price increases affecting basic necessities like housing, utilities, transportation, and food. Price increases for basic necessities comprising a large share of the average New Yorker’s household budget disproportionately impact lower-income households. As a result, greater price stability can be achieved if local legislators utilize the power they have to regulate and negotiate consumer prices of other basic necessities, like safeguarding and expanding rent control policies or limiting price increases of public transportation and utilities. In doing so, State and City policymakers can help to keep these prices from spiraling upward, which would disproportionately impact low- and middle-income New Yorkers, while facilitating real growth and advancement opportunities for New Yorkers.

Figure 3

Lauren Melodia

24 de agosto de 2023

bottom of page