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People in the U.S. Northeast are getting bigger paychecks as economic growth in the region picks up, keeping the labor market tighter than in other parts of the country, according to the Bank of America Institute (BAC-5.50%).
The trend is pronounced in lower- and middle-paying industries, probably because employers are competing for a diminishing workforce, the researchers wrote in a report, citing credit and debit card data. Higher-income workers are returning as employers in New York City push return-to-office policies.
The Northeast, which has lagged the South and West in GDP growth, may catch up with those regions, the team led by economist Joe Wadford wrote. “While the cost of living remains an obstacle, a strengthening labor market in New York, Massachusetts, Maine, and Vermont may provide a positive start.”
The Northeast was the only U.S. region to see economic growth accelerate for the first three quarters of 2024, even as it lagged the South and West by almost 7 percentage points of GDP increase since 2019, the economists wrote.
The wage gains in the Northeast are unusual, according to the BofA report. Gains are being led by middle-paid sectors like educational and health services and lower-paid spaces such as leisure and hospitality. High-paid industries like finance and tech, which usually lead increases, are underperforming.
Return-to-office policies may also be boosting average pay because the kind of workers who are coming back to New York City to work after having been remote tend to have higher incomes.