Washington’s average annual wage grew 7.4% to $82,508 last year with King County leading the way, according to a recently released annual report by the state Employment Security Department.
Nationally, among the largest U.S. counties, King County recorded the largest increase in weekly wages after Miami-Dade County, Florida, over the year from 2020.
The strong demand for workers and hiring difficulties across different sectors drove wage growth in 2021 to the second largest increase in over two decades for Washington, the department said. The highest increase was in 2020, when the average annual wage grew 10.3%.
But a closer look at the data shows wage gains were distributed unevenly across the state and across industries.
King County recorded the highest increase in its average annual wage after a dip in the first year of the pandemic.
At $115,436, the annual average wage here is ahead of other parts of the state by over $46,000 — more than the average annual wage of nine counties.
But annual wages only tell part of the story of King County’s economy. A small number of high-wage workers can make it appear as though income gains are broadly felt.
Though all sectors experienced average wage growth in 2021, the greatest wage growth over the previous year occurred in the leisure and hospitality sector, one of the state’s top 10 employers.
Annual average wages in this sector, which employs over a quarter of million, mostly low-wage, workers increased 14.2% to reach an annual average of about $30,000.
But the hospitality sector recorded one of the largest declines in wages among all sectors in 2020 and is still recovering from the economic impact of the pandemic.
Meanwhile, the industries that continued to see high wage growth through the pandemic were IT and finance and insurance.
With these well-compensated tech and finance workers skewing average wages in King County higher, median hourly wage data is a more realistic metric of wage growth here, said economist Jacob Vigdor, a professor of public policy and governance at the University of Washington.
An analysis of the median hourly wages shows King County still reported the highest hourly wage at $40.48 for 2021. Like the annual average, this grew at a higher rate in 2020.
The composition of the labor market may explain this trend, Vigdor explained.
“The drop in employment from 2019 to 2020 was most pronounced amongst the lowest-paid workers, so that’s one of the reasons why the median wage went up between 2019 and 2020, despite the recession,” he said.
In 2021, when these low-wage workers reentered the labor market as the demand for services and goods resumed, the median hourly wage did not increase as much.
The median hourly wage for the state, barring King County, is $25.
But while workers in the Seattle metro area earn more than their counterparts in other parts of the state, an accelerated growth in the cost of living has cut sharply into their real purchasing power.
Rising inflation may also explain why the average number of workers employed in King County has declined since 2020, while increasing in Eastern Washington.
In Columbia, Asotin and Stevens counties, where wages are relatively modest and less than half the average in King County, the average number of workers rose significantly — pointing to a shift in worker demographics.
This was one of the consequences of the early stages of the pandemic, said Vigdor.
“If you have people who can’t find work, because their employer has shut down during the pandemic, there’s a higher likelihood they relocated to someplace with a lower cost of living and that is quite possibly what the statistics are showing here.”
Correction: An earlier version of this story stated King County ranked second in the U.S. for the largest increase in weekly wages. It ranked second among the largest counties. The earlier version also said that the annual wage growth in 2021 was the second largest on record in Washington. It was the second largest growth in the past two decades.