PROVIDENCE – Rhode Island employees who stayed in the same job received an average pay increase of 5% year over year, according to an ADP Research Institute report, placing the Ocean State No. 44 in the country for raises.
Nationwide, employees who stayed in the same job from December 2022 through December 2023 received a 5.4% average pay increase year over year, down from a 7.3% year-over-year increase during the same period last year. The median salary for Rhode Islanders also lags the national average, at $54,700, compared with $58,700 nationally.
Rhode Islanders who took a new job, meanwhile, saw a larger year-over-year pay increase, at 7.1%. But at the national level, this figure nearly doubles for job changers, at 14.7%.
While Rhode Island ranked low among the U.S., the results don't alarm – or surprise – Leonard Lardaro, a professor of economics at the University of Rhode Island.
In part, that's because "we had a fairly high wage growth in December of 2022,” Lardaro said. “What that means is that it’s not easy to beat or match that rate."
Rhode Island’s ranking also aligns with how the Ocean State typically ranks in similar metrics, Lardaro said.
“As national rankings go, 44th for us is pretty good,” he said. “I made up a law years ago that said that in any 50-state economic comparisons, Rhode Island trends toward its alphabetical ranking of 42nd. And there you are.”
Rhode Island also lagged its neighboring states, with Massachusetts residents earning a median salary of $72,600 – the second-highest in the U.S., according to the report, trailing only Washington, D.C. – and Connecticut residents making $58,900.
Lardaro says that Rhode Island’s heavy reliance on the tourism and hospitality industries likely shapes this salary metric, with employees in these sectors typically earning below average wages. In contrast, states with a higher number of manufacturing and technology jobs – Massachusetts, for instance, which boasts Boston as a tech giant, in addition to smaller tech hubs within the state – typically pay higher wages.
Other factors could also sway the results, Lardaro said, such as lingering pandemic influences, drop-off in seasonal employment and minimum wage changes.
Christopher Limnios, an associate professor of economics at Providence College, also wasn't surprised to see that people who changed jobs received significantly higher pay increases.
“People who come to a new job might have a little more leverage there than people (already) working for the company” when negotiating pay, Limnios said, with employers using higher wages and better benefits in an attempt to attract top talent.
Massachusetts and Connecticut joined Rhode Island in falling behind the national average for pay increases: Despite boasting the highest median salary in the country, Massachusetts slightly lagged the national average for raises, with a 5.3% average increase. Connecticut residents, at 5%, had the same average pay increase as Rhode Islanders.
ADP collects data for the report on a monthly basis, drawing from payroll data from around 17 million jobs.
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.
