Comparing Metro Phoenix
Average Wage by Occupation
Description: This indicator depicts wages on an hourly or weekly basis by occupation.
Rationale: Wage levels by occupation are important to businesses as well as to workers. Both a comparison of the levels of wages between occupations and the variances across metropolitan areas are important.
Data Sources: U.S. Department of Commerce, Bureau of Labor Statistics, Occupational Employment Survey: May 2006. Data are reported for 22 occupational groups and hundreds of occupations, though much of the data are withheld due to federal disclosure restrictions. Data are available by metropolitan area, county, state, and the nation. http://www.bls.gov/oes/home.htm.
Comments on the Quality of the Data: The data are collected over a three-year period – the May 2006 release includes data collected during 2004, 2005, and 2006. This sampling strategy does not affect the accuracy of comparisons across metropolitan areas at any point in time, but comparisons over time would best be undertaken using three-year intervals.
No adjustment has been made for geographic differences in the cost of living. Thus, it may not be appropriate to conclude that economic well-being is better in one metropolitan area than another based on the unadjusted wages by occupation being higher.
An adjustment for geographic differences in the cost of living has not been made for multiple reasons:
- No comprehensive measure of living costs is available for all metro areas (or states).
- The ACCRA cost-of-living index frequently is used for this purpose, but not all metro areas participate in this study. Further, the ACCRA study is designed to measure living costs for only a segment of the population (professional and managerial households in the top income quintile), and taxes are not included.
- Differences in living costs in part reflect differences in the perceived quality of life. For example, an individual may choose to live in an area in which cost-of-living-adjusted wages by occupation are relatively low because of the area’s perceived amenities. The academic literature suggests that even if an acceptable measure of cost of living were available, wages by occupation (or other dollar measures) should be adjusted only partially (perhaps 40 percent) for living costs.
While geographic differences in living costs can vary over time, the over-time variations generally are modest relative to the magnitude of the level of the geographic differences. Thus, the rate of change over time in wages by occupation (or other dollar measures) is less affected by geographic differences in living costs than is a comparison of areas at one point in time.
