Upward trend: why wage growth in Utah is finally getting back on track.

• Author: Madison, Rachel
• Position: Business Trends

For years after the end of the Great Recession, Utah was touted for having some of the strongest job growth in the nation and an accompanying rapidly decreasing unemployment rate. But when it came to wage growth, things stayed fairly static. It wasn't until 2015 that wages began to play catch up. And now? Wages are finally starting to move onward and upward.

STAGNANT WAGE GROWTH

Carrie Mayne, chief economist for the Utah Department of Workforce Services, says wages in the state are finally growing at the pace she's been expecting to see for a few years.

"Twelve to 18 months ago, I would have been telling a slightly different story," she says. "That's because wages were growing at a fairly slow place, which was surprising because our [state's] economy was doing so well. When you see all the signs of a tight labor market, like a low unemployment rate, you expect to see wage acceleration, but we weren't seeing it. We were completely befuddled by that."

But Mayne says the reason why wages weren't growing for so long has everything to do with the Great Recession. "That was a dynamic in our economy that we hadn't seen since the Great Depression," she says. "It created a glut in labor supply. If you think back to the recession, there was very high unemployment and that keeps wages down. Because that had such a huge effect, it kept wages depressed for quite some time."

Even past the point where economists were saying Utah had fully recovered, they weren't seeing wage growth. "There was a lag in the markets while they adjusted to that expansionary economy, and growth has now finally kicked in over the last 12 to 18 months," Mayne says. "Utah was one of quickest states to recover--there are still a few states out there waiting for full recovery to happen."

Juliette Tennert, director of economic and public policy research at the Kem C. Gardner Policy Institute at the University of Utah, says Utah had a large number of people who had left the labor force altogether during the recession. "Over the last few years, these marginally attached workers were coming back into the workforce. It also took some time for wages to grow because of these people," she says.

Another thing that possibly led to dampened wage growth was Utah's compositional aspects of labor force at play, Tennert says. "The Baby Boomers are leaving the workforce, and those folks are relatively high wage earners compared to those replacing them," she says. "In addition, the first jobs to be...