Real and Nominal Pay in Grand Forks County

So I exchanged text messages with a friend about local economic data last week, and they asked about the rate of inflation and wage gains and what was happening with that nationally and locally. Enough sources deal with the national picture that I decided to focus on the local picture for this post. I used the CPI (all urban consumers, national average), since that is what my friend discussed, to calculate the real value of annual pay for Grand Forks county. 

Not a surprise that the nominal series is significantly higher than the real series. That is what you would expect. The good news? Annual pay is increasing in Grand Forks county. The annual rate of growth for nominal pay in Grand Forks County from 2001 to 2017 is 3.62%. The growth rate for real annual pay over the same time period is 1.54%. The good news then is both nominal and real annual pay is growing in Grand Forks County. That was for all employees, public and private.

When we look at some comparable numbers we see some interesting results. For Cass County the real wage growth was 1.34% per year over the same time period so Grand Forks county actually grew at a better rate. Both counties were behind the state average annual growth rate for real income, which was 2.19%.

I think many people find the private sector growth more compelling. The annual growth in real private sector annual pay fro 2001 to 2017 was 1.63% per year. For Cass County over the same time the annual growth rate was 1.38%, and for the state as a whole was 2.35%. So the good news for Grand Forks county is that there were gains, albeit small ones, against Cass County, but the growth rate was far behind the state average. 

Let’s back away form the county level comparisons for a moment and think about this in a larger labor market context. One of the oft repeated complaints from the radio callers is that we cannot get or keep labor in the county. Okay it is really about the city but the same issue holds for the county as well. People respond to signals, such as wages and wage growth, and are unlikely to come to an area, or stay for long, if the wage growth in that area is not keeping up with other areas. It seems pretty clear that you can make such an argument about the performance in Grand Forks having that quality. 

Wages are not the only factor of course. There are quality of life considerations that matter and Grand Forks should score well on that front, but for many people that likely is a secondary or tertiary tier of factors. We need to consider that as part of the strategic plan for Grand Forks as well.

One final thing to bring up here is that this is just a gross pay number and has nothing to do with after tax numbers. I bring this up related to the recent increase in the sales tax in Grand Forks. As we consider the implications for that number and the financing of fiscal needs we need to consider carefully how we are going to reach the various city goals in the least distortionary fashions possible. 


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