King County workers’ paychecks shrank in 2022, marking the first decline in at least a decade and a reversal of the tremendous wage growth recorded during the first two years of the pandemic.
That decline in wages came even as the number of people employed continued to grow and the statewide labor market remained tight.
“The labor market is still pretty strong, it’s still hiring people,” state economist Paul Turek said. “The demand for workers may not be quite as strong as it used to be, but it is still strong historically.”
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But 2022 saw consumer and business demands for tech products shift, leading to massive layoffs at Microsoft, Amazon and other players in the high-paying tech industry that have bled into 2023. As the demand for goods and services continued to grow despite limited supplies, inflation hit a record high in 2022, affecting the costs of groceries, gas and basic essentials, ultimately hurting real incomes and wage growth.
“It is a two-sided issue when you compare the wage growth against the degree of inflation that’s taken place,” Turek said. “The actual real wage is not what we see in print.”
Despite recording a decline in wages, King County’s annual average wage in 2022, at $113,947, was the highest of any Washington county, and 38% ahead of the state average of $82,886.
In 2022, wages grew 0.5% statewide, the lowest growth in a decade, after logging a 7.5% increase in 2021, according to a Seattle Times analysis of data from the state Employment Security Department. Costs climbed 9% in the Seattle area in 2022.
Meanwhile, the average number of employed workers was 4% higher in 2022 than in 2021. Not only has employment recovered well from its 5.3% drop during the first year of the pandemic, 2022 also recorded the highest average employment growth rate in a decade.
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“We’re getting more people into jobs, and certainly … that’s a boost for them,” Turek said. “Unfortunately some of that boost diminishes a little bit over time with inflation.”
The statewide slowdown directly connects to a 1% decline in the average wages of King County workers in 2022.
King, Ferry and Klickitat counties recorded a decline in annual average wages, though King County’s average remains far higher than those in the rest of the state.
A readjustment of the tech sector’s unbridled growth during the pandemic is largely responsible for the slowdown in wage growth.
“Consumers’ and businesses’ reliance on tech products really grew by leaps and bounds during the pandemic,” Turek said.
”The tech sector has had to come down to earth a little bit as we saw with the tech layoffs and cost cutting,” he continued.
Information technology was the only sector to record a decline in average wages and employment in the state, which fell by 12% and 2%, respectively.
Despite this drop, tech employment is still 7% higher than it was before the pandemic hit. Tech workers remain the highest earners, skewing average wages across the state.
Average wages in food and hospitality or arts and entertainment are around one-sixth of average salaries in the IT industry.
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Two industries — food and hospitality, and arts and entertainment — recorded some of the highest wage and employment increases. While wages in these industries are now 20% and 30% higher than they were before the pandemic, respectively, both have yet to recover from enormous pandemic-driven drops in employment.
Reflecting an ongoing shift toward a tech-driven economy, average employment in manufacturing, which has consistently declined since before the pandemic, recorded 4% growth in 2022. Manufacturing employment is still lower than it was five years ago.
Among all U.S. states, the tech industry has the greatest economic influence on Washington; nearly 1 in 10 residents is in tech, which shapes 20% of the economy, according to CompTIA, one of the IT industry’s top trade associations.
Most tech jobs (80%) are based in the Seattle metro area, where the sector influences 30% of the local economy. Despite layoffs, CompTIA projected tech job openings to increase by nearly 4%. This was evident in King County, which still recorded some employment growth in the IT industry, though wages dropped 9%.
