New U.S. Census Bureau data signaled a tight labor market and competition are pushing up some Nashville-area wages, but affordability remains a regional challenge.
Photo by Tanner Boriack on Unsplash

 

Four years ago, staff at the YMCA of Middle Tennessee pooled together all the prayer request boxes from its locations across the region and found that members were consistently asking for relief from financial struggles.

Ranking among the top hardships — which included marriage, relationship and grief struggles —  people wanted resources, or, perhaps, divine intervention, to handle their finances.

Susan Cress, a Y staff leader, settled on offering Dave Ramsey’s Financial Peace University program because of its reach, name recognition and faith-centered message. Next month, all of the Middle Tennessee Ys will be launching the latest nine-week session of Financial Peace University ahead of the holiday season — an extra financial stressor for many people.

The tangible requests underscored how people struggled with their finances, beyond the day-to-day hustle, and led to a realization that the Y needed way to help members navigate a serious stressor, said Cress.

“I know the economic landscape in Middle Tennessee has changed dramatically over the last five years,” said Vona Wilson, chaplain for the YMCA of Middle Tennessee. “For people’s emotional and spiritual health, financial health is a major factor.”

The demand for the Y program coincides with Nashville’s prolonged growth spurt that has upset a longstanding balance between wages and the cost-of-living. The disparity is worrying regional business leaders and promises to further reshape people’s lives as well as how the region moves in the coming years as people try scout for more affordable lifestyles, experts said.

The race to develop and bring in talent to a region that’s attracting an increasing number of advanced office and manufacturing jobs fueled a spike in the cost of living that’s outpaced the overall growth in paychecks.

As of 2017, the median household income in the greater Nashville area, which includes Franklin and Murfreesboro, has risen to $63,939, according to American Community Survey data released in the last week by the U.S. Census Bureau. In 2014, it was $52,640 and hit $60,030 in 2016.

  • Statewide, the median household income was $51,340 in 2017 up from $48,547 the year prior and $44,361 in 2014. 
  • Nationally, the median income in 2017 notched in at $60,336, up from $53,657 in 2014.

People are simultaneously grappling with how much money it takes to call Nashville as well as other zip codes home. And, across the nation consumers have accrued a record amount of debt — $13.1 trillion at the end of 2017, per the New York Federal Reserve. People aged 22 to 37 living in Nashville have a median $23,429 in debt, not including mortgages, according to Lending Tree.

“The (Census Bureau) wage number is just in the nick of time when compared to the way the cost of living has been rising,” said Ralph Schulz, CEO of the Nashville Area Chamber of Commerce.

(Nashville, however, isn’t facing the same crunch as Seattle.)

Wage increase isn’t uniform while costs rise for most

The recent jump in median wage is partly driven by an influx of highly-sought positions, particularly those such as data analysts, software engineers and other tech positions that are in high demand by a variety of industries, but especially health care, said Murat Arik, director of the Business and Economic Research Center at Middle Tennessee State University.

Arik, like Schulz, is optimistic about greater Nashville’s prospects even as national economic indicators signal a downturn is somewhere on the horizon. The economy is hot and relatively diverse while education options abound under Gov. Bill Haslam’s initiatives, which Schulz and Arik both credited as a boon for the future of the region. 

The steady swell of companies expanding or relocating to the Nashville area will both help insulate the metro area — to some degree — in a downturn, but also continue applying pressure to a decades-old urban ecosystem that is trying to accommodate a ballooning car-driving population.  

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Arik thinks the economic tension around Davidson and Williamson Counties is “induced more by the cost side than the payroll or wage side.”

Greater Nashville’s cost of living was 88.5 percent of the national average in 2009. The cost of living had surged to 99.6 percent in the first quarter of 2018, per an index the Chamber uses from the Council for Community and Economic Research, which analyzes different types of data, including federal.

The estimated cost of living varies, depending on methodology, but two from this year estimate a substantially higher wage is necessary than the newly released median. The Economic Policy Institute estimated a four-person family (two adults, two children) would need $79,228 per year to live comfortably.

A recent report from GoBankingRates.com pegged a comfortable salary in Nashville to be around $80,500, spurring chatter about what residents already experience: wages haven’t increased the way costs have. Schulz said the disparity between wage and costs is a top concern for the Chamber and its members, but challenged the methodology behind that particular calculation.

It’s important for the area, Schulz said, for wage growth to catch-up with costs because livability is key to both keeping and attracting new people. He’s optimistic the economy and education initiatives will continue to drive wages up. 

The poverty rate for the greater Nashville area dropped in the latest Census data release from 15.1 percent in 2014 to 10.1 percent in 2017, although the percentage of children in poverty remains higher at 15.1 percent.

Just because new Census data points to an increase in the median wage, doesn’t mean it’s felt by all. Many people haven’t seen significant growth in wages, but do feel the pinch as the price tag of education, gas and housing increases. The stress of living in a high growth market where the costs hit new highs before wages is evidenced by interest in searching, or praying, for ways of relieving financial strain.

Affordability is becoming a real issue in certain hotspots and we are not experiencing a huge growth in wages. We have some growth here, but in not in terms of (counteracting) the affordability side,” said Arik. “Over time I think some of the folks working in Nashville — I think they are going to spread further and move to areas they haven’t considered so far like Robertson County and Cheatham County.”

Arik thinks the longer-term question around cost-of-living and wage is going to hinge on transit, and how the region’s leaders handle a bursting road system. Recalling his own recent decision to leave meetings in Nashville at 3:30 p.m. to miss traffic on the way back to Rutherford County — he said he still found himself sitting on the highway.

That reality is going to complicate the wage-cost equation even more in the future as people try to figure out how to live comfortably on their income, he said.

“My big concern for (Nashville and) some of the submarkets is whether there is the political environment to lead on some sort of solution on the transportation issue. We have to solve that,” said Arik.

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