The States With the Fastest-Growing Wages Are Controlled by Republicans—Coincidence?

Actually, yes. Probably.
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In 37 states today, the governor's office, senate, and house are all controlled by the same party, whether Democratic or Republican. As Grover Norquist said in our interview at the Atlantic Economic Summit last month, Washington might be paralyzed, but one could see which policies work (and which don't) by studying the states where one party has the opportunity to enact its full agenda with limited opposition and measure its effect.

Our states have long served as "laboratories" of democracy, as Supreme Court Justice Louis Brandeis put it. Thanks to polarization, it seems, we have something like control groups in our great national experiment.

So don your lab coats and let's investigate. The Bureau of Economic Analysis recently released its full report on state-by-state personal income growth. The big-picture news is that every state's income grew slower in 2013 than in 2012, mostly because Social Security taxes went up as the payroll holiday came to an end. Woof.

Zeroing in on the state level, I looked exclusively at wages and salaries, rather than include checks from the government and other non-wage sources of income. Here are the ten states with the fastest-growing wages. North Dakota is sort of its own country, so I've colored it in red.

What do they have in common?

Norquist and Republicans will notice that there are a lot of Red states here. The five states with the fastest-growing wages are all controlled by the GOP at the governor, state senate, and house levels.

But somebody in the energy sector might look at the same list and notice something else: Wages are growing the fastest in states that produce oil. North Dakota, Texas, and Oklahoma are three of the top crude-oil producers in the country. States lucky enough to live immediately above oil reserves benefit from the fact that mining wages grew faster in the last 12 months than any other major occupation category. As for the other stats, Utah is deep red at the state government level, with the low taxes and tremendous business growth to prove it. But Colorado, Oregon, and Washington are all deep blue, and their overall wages are charging ahead, too. When you adjust for energy, it's not clear at all that red states are doing better than blue states. 

Now let's skip to the bottom of the list: Here are the states where wages grew slower than national inflation (which isn't the same as saying they all declined in real terms, since inflation varies by state). 

What's the big obvious political takeaway here? There isn't one. We have three fully blue states (West Virginia, Maryland, Illinois), three states with divided control of state government (Virginia, Kentucky, New Mexico), and three fully red states (Alabama, Wyoming, South Dakota). Once again, however, one spies an underlying trend: The fact that the Virginia, Maryland, and the capital all saw awful wage growth is a reflection that the federal government did an awful job growing wages. Government shutdown, furloughs, and reduced spending contributed to a lackluster year for the larger Beltway.

The story these graphs tell me is that although the policies we control matter a great deal, uncontrollable factors (like the amount of energy-producing stuff lurking under the ground, or decisions made by a governing body that indirectly or directly pays your workforce) are perhaps the more important determinant of local growth. It would be nice if the laboratories of democracies would satisfy our desire for easy and complete answers. Then again, labs have always been better at testing our hypotheses than confirming them.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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