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Occupational Pay Comparisons Among Metropolitan Areas


Average pay for civilian workers in the San Jose-San Francisco-Oakland, CA metropolitan area
was 20 percent above the national average in 2010, one of 77 metropolitan areas studied by the
National Compensation Survey (NCS), the U.S. Bureau of Labor Statistics reported today.  The
Brownsville-Harlingen, TX metropolitan area had a pay relative of 80, meaning workers earned an
average of 80 cents for every dollar earned by workers nationwide.  Using data from the NCS, pay
relatives—a means of assessing pay differences—are available for each of the nine major
occupational groups within surveyed metropolitan areas, as well as averaged across all occupations
for each area.  The average pay relative nationally for all occupations and for each occupational
group equals 100. (See table 1.)

A pay relative is a calculation of pay—wages, salaries, commissions, and production
bonuses—for a given metropolitan area relative to the nation as a whole.  The calculation
controls for differences among areas in occupational composition, establishment and occupational
characteristics, and the fact that data are collected for areas at different times during the year.
Simple pay comparisons calculating the ratio of the average pay for an area to the entire United
States in percentage terms would not control for interarea differences in occupational composition
and other factors, which may impact pay relatives.

Chart 1 lists selected metropolitan area pay relatives compared to average pay nationally
among those studied in the NCS.  Table A provides selected metropolitan area pay relatives for each
of five major occupational groups.  In addition, area-to-area comparisons have been calculated for
all 77 metropolitan areas and are available on the BLS website at http://www.bls.gov/ncs/ocs/payrel.htm.

Table A. Selected metropolitan area-to-national pay relatives and major occupational groups, July 2010
(of 77 metropolitan areas surveyed)

          Major Occupational Group                        Metropolitan Area                Pay Relative
Management, business, and financial            New York-Newark-Bridgeport, NY-NJ-CT-PA           120
                                               Los Angeles-Long Beach-Riverside, CA              108
                                               Reno-Sparks, NV                                   108
                                               Salinas, CA                                       108
                                               San Jose-San Francisco-Oakland, CA                108

Office and administrative support              San Jose-San Francisco-Oakland, CA                120
                                               New York-Newark-Bridgeport, NY-NJ-CT-PA           115
                                               Boston-Worcester-Manchester, MA-NH                114
                                               Hartford-West Hartford-Willimantic, CT            114
                                               Washington-Baltimore-Northern Virginia,           112

Service                                        San Jose-San Francisco-Oakland, CA                126
                                               Salinas, CA                                       123
                                               Seattle-Tacoma-Olympia, WA                        123
                                               Hartford-West Hartford-Willimantic, CT            119
                                               Minneapolis-St. Paul-St. Cloud, MN-WI             115
                                               San Diego-Carlsbad-San Marcos, CA                 115

Production                                     Detroit-Warren-Flint, MI                          117
                                               Sacramento-Arden-Arcade-Truckee, CA-NV            117
                                               Bloomington-Normal, IL                            116
                                               Seattle-Tacoma-Olympia, WA                        115
                                               Providence-New Bedford-Fall River, RI-MA          113

Transportation and material moving             Seattle-Tacoma-Olympia, WA                        117
                                               Minneapolis-St. Paul-St. Cloud, MN-WI             114
                                               Boston-Worcester-Manchester, MA-NH                111
                                               Kansas City, MO-KS                                110
                                               Salinas, CA                                       109
                                               San Jose-San Francisco-Oakland, CA                109

     The pay relative for production occupations in the Detroit-Warren-Flint, MI and
Sacramento-Arden-Arcade-Truckee, CA-NV areas was 117, meaning the pay in these two metropolitan
areas averaged 17 percent more than the national average pay for that occupational group.  By
contrast, the pay relative for production workers in the Brownsville-Harlingen, Texas area was 80,
meaning pay for workers in those occupations averaged 20 percent less than the national average.
(See table 1.)

Statistical significance measures are not available for news release and area-to-area comparison tables.


                                     NOTICE OF FINAL NEWS RELEASE

     This is the final Occupational Pay Comparisons Among Metropolitan Areas news release.  Funding
for the Locality Pay Survey program is ending.  However, the other programs of the National
Compensation Survey, such as the Employment Cost Index, Employer Costs for Employee Compensation, and
benefit publications will continue to be produced.


                                          TECHNICAL NOTE

Pay relative controls and calculations

     Pay relatives control for differences among areas in occupational composition as well as
establishment and occupational characteristics.  Metropolitan areas often differ greatly in the
composition of establishments and occupations that are available to the local workforce.  For
example, in Brownsville-Harlingen, Texas, the ratio of workers in the high-paying management,
business, and financial occupational group to the number of workers in all occupations is under 6
percent, whereas nationally this ratio is nearly 10 percent.1  In addition to these factors, the NCS
collects compensation data for metropolitan areas at different times during the year.  Payroll
reference dates differ between areas, which makes direct comparisons between areas difficult.

     The pay relative approach controls for these differences to isolate the geographic effect on
wages.  To illustrate the importance of controlling for these effects, consider the following example
.  The average pay for construction and extraction workers in the New York-Newark-Bridgeport,
NY-NJ-CT-PA metropolitan area in 2010 was $32.54 and in the United States, $21.18.2  A simple pay
comparison can be calculated from the ratio of the two average pay levels, multiplied by 100 to
express the comparison as a percentage.  The pay comparison in the example is calculated as:

($32.54 ÷ $21.18) × 100 ≅ 154

     This comparison does not control for differences between New York and the nation in the mix of
occupations, industries, and other factors.  A more accurate estimate of the geographic effect of
wages in New York can be obtained by taking these differences into account.  Controlling for
differences in occupational composition, establishment and occupational characteristics, and the
payroll reference date in New York relative to the nation as a whole, the pay relative for
construction and extraction occupations in New York is 129.

Survey methodology

     Pay relatives were estimated using a multivariate regression technique designed to control for
interarea differences.  This technique controls for the following ten characteristics:

     - Occupational type
     - Industry type
     - Work level
     - Full-time / part-time status
     - Time / incentive status
     - Union / nonunion status
     - Ownership type
     - Profit / non-profit status
     - Establishment employment
     - Payroll reference date

     Even accounting for the characteristics used in the current regression analysis, there is still
wage variation across the areas.  The variation is due to differences in wage determinants that were
not included in the model.  Examples of these determinants include price levels, environmental
amenities such as a pleasant climate, and cultural amenities.

     Historical pay relatives data are available for the survey years 1992-1996, 1998, 2002,
2004-2009.  There are several differences between the recent pay relatives and the pay relatives for
earlier years, including different industry and occupation classification systems, varying
methodology, and different survey designs.  These differences limit comparability.  The pay relatives
since 2004 have been calculated using the same industry and occupation classification systems,
methodology, and survey design.  Nonetheless, comparisons between the estimates for these years
should be made only with caution.

     For more details on survey design, methodology, classification systems, recent changes in the
survey, and appropriate uses and limitations of the data, see BLS Handbook of Methods, Chapter 8,
“National Compensation Measures,” available on the Internet at
http://www.bls.gov/opub/hom/homch8_a.htm, especially the major section “Area-to-Nation and
Area-to-Area Pay Comparisons.”

Obtaining information

     Articles, bulletins, and other information from the National Compensation Survey may be obtained
by calling (202) 691-6199, sending email to NCSinfo@bls.gov, or visiting the Internet site
http://www.bls.gov/ncs.  Information in this release will be made available to sensory impaired
individuals upon request.  Voice phone: (202) 691-5200; Federal Relay Service Number: 1-800-877-8339.



   (1)  Data for this example are based on the May 2010 Metropolitan and Nonmetropolitan Area
Occupational Employment and Wage Estimates, on the Internet at

   (2)  Average pay for construction and extraction workers in New York and for the United States
are based on wage estimates published in New York-Newark-Bridgeport, NY-NJ-CT-PA National
Compensation Survey, May 2010 and National Compensation Survey: Occupational Earnings in the United
States, 2010, on the Internet at http://www.bls.gov/ncs/ocs/compub.htm.

Additional Charts and Tables

United States Department of Labor | Bureau of Labor Statistics | www.bls.gov
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