U.S. BUREAU OF LABOR STATISTICS COMPENSATION AND WORKING CONDITIONS

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Pay Relatives for U.S. Census Regions and Divisions, 2006

by John E. Buckley

Bureau of Labor Statistics

Originally Posted: August 28, 2008

Results from the 2006 National Compensation Survey show that average pay levels in the Northeast and West are higher

than in the South and Midwest.

The National Compensation Survey (NCS) provides national, regional, and locality estimates of occupational wage rates in

the civilian sector of the United States.1 To simplify comparisons of pay levels among localities and regions, the NCS

publishes pay relatives. A pay relative is a calculation of earnings--wages, salaries, commissions, and production bonuses--

for a given geographic area relative to the Nation as a whole.2 The calculation of pay relatives among localities controls for

differences in occupational composition, establishment and job characteristics, and the fact that locality data are collected at

different times throughout the year.

The NCS has produced national pay relatives for selected localities annually since 2004. This article presents pay relatives

for the four census regions and the census divisions within those regions. The pay relatives are calculated for all civilian

workers and for each of nine major occupation groups. The article emphasizes the importance of the statistical significance of

the numbers used for comparisons among geographic areas. It also discusses some of the possible consequences of making

simple wage comparisons among geographic areas using only published average hourly earnings.

The U.S. Census Bureau defines four regions in the United States--the Northeast, the South, the Midwest, and the West.

Census divisions are subsets of the census regions; for example, the Northeast region includes two divisions: New England

and Middle Atlantic. (See appendix for a complete list of the census regions and divisions and the States contained in them.)

The national pay relative is set at 100, and regional and divisional pay relatives are calculated in relation to this figure. Chart

1 shows the pay relatives for each of the four census regions3:
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Data Considerations

NCS pay relatives are estimated using a multivariate regression technique to control for geographic differences in the

following: • occupation type (6-digit Standard Occupational Classification) • industry type (3-digit North American Industry Classification System) • work levels

• full-time and part-time status

• time or incentive paid status

• union or nonunion status

• ownership type (private or State and local government) • profit or nonprofit status

• employment size

• payroll reference date

Simple pay comparisons can be calculated using the published wage averages of census regions and census divisions.4

However, estimates that do not control for the factors listed above can be misleading.5 For example, the published average

earnings for all workers in the West South Central and New England census divisions were $17.12 and $22.54, respectively.

As chart 2 shows, when averages such as these are used to produce simple pay comparisons based only on their

differences from the published U.S. estimate, the implied result can either overestimate or underestimate the actual

differences among areas6:

Note that average pay in the West South Central division is only 76 percent of average pay in New England (89 ÷ 117). By

contrast, when differences in factors among the areas are controlled for in the calculation, the pay for West South Central is

84 percent of that of New England (92 ÷ 109).

Pay Relatives Among Census Regions And Divisions

Table 1 shows the pay relatives for each major occupational group by census region and division:
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Table 1. Pay relatives for major occupational groups in census regions and divisions, National Compensation Survey,

June 2006

(Average pay nationally for all occupations and for each occupational group shown = 100.)

Census

Region

and

Division

All

occupations

Management,

business,

and financial

Professional

and

related

Service

Sales

and

related

Office

and

administrative

support

Construction

and

extraction

Installation,

maintenance,

and repair

Production

Transportation

and

material

moving

Northeast

region 106* 108* 107* 108* 104* 107* 113* 106* 102* 105*

New

England

division

109* 108* 107* 111* 107* 110* 115* 110* 108* 108*

Middle

Atlantic

division

106* 108* 107* 107* 103* 106* 112* 105* 101 104*

Midwest

region 99* 96* 98* 98* 97* 98* 101 99 102* 100

East

North

Central

division

101 98 99 99 99 100 104* 100 103* 102*

West

North

Central

division

96* 93* 95* 97* 95* 94* 99 98 101 96*

South

region 94* 95* 95* 93* 95* 96* 91* 94* 96* 96*

South

Atlantic

division

97* 95* 96* 96* 97* 98* 92* 96* 99 99

East

South

Central

division

93* 95* 92* 93* 96* 93* 92* 93* 94* 95*

West

South

Central

division

92* 94* 94* 88* 93* 92* 88* 92* 91* 91*

West

region 105* 104* 103* 108* 108* 104* 105* 107* 102* 103*

Mountain

division 97* 95* 96* 97* 99 97 96 104* 98 101

Pacific

division 108* 107* 107* 113* 113* 107* 111* 108* 103* 104*

* Pay relative value significantly different from the national average.

The pay relatives were tested at the 10-percent level of statistical significance to determine if each, despite its value, is

significantly different statistically from the national average of 100. Those pay relatives with an asterisk (*) next to the value

were found to be significantly different from the national average.

In the South region and its three constituent divisions--South Atlantic, East South Central, and West South Central--almost all

of the pay relatives for the nine major occupational groups were less than the pay relative for the Nation as a whole.
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Production and transportation and material moving occupational groups in the South Atlantic division, while less than 100,

were not significantly different than the national average.

By contrast, almost all of the pay relatives for occupational groups in the Northeast region and its two census divisions--New

England and Middle Atlantic--were higher than the national average. With a pay relative of 101, production workers in the

Middle Atlantic division were not paid significantly differently from the national average. On the other hand, all of the pay

relatives in the West region and its Pacific division were significantly above the national average. In the West's Mountain

division, however, only installation, maintenance, and repair occupations had pay relatives significantly greater than the

national average.

Distribution Of Pay Relatives Within Census Regions And Divisions

Although regions and divisions that are high paying in one major occupation group tend to be high paying in others, there are

differences in pay relatives within such geographic areas. For example, in the Northeast census region, pay relatives ranged

from 113 for the construction and extraction occupations to 102 for production occupations. Similarly, pay relatives in the

Northeast's Middle Atlantic division ranged from 101 for production occupations to 112 for construction and extraction

occupations. By contrast, in the East South Central division, pay relatives ranged only from 92 percent of the national

average for the professional and related occupations to 96 percent for construction and extraction occupations.

Although occupational groups in the South region and its three divisions had no pay relatives above the national average that

were significantly different from the national average7, there were pay relatives greater than 100 in several metropolitan

areas within the South. For example, the Washington, DC, metropolitan area had pay relatives significantly higher than the

national average for several major occupational groups.

Area-to-national pay relatives for the nine major occupational groups in 78 individual areas can be found at http://

www.bls.gov/ncs/ocs/payrel.htm#National. Area-to-area pay relatives are available at http://www.bls.gov/ncs/ocs/payrel.htm. Appendix. Distribution Of States By Census Region And Division

Northeast region Midwest region

New England Middle Atlantic8 East North Central9 West North Central10

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

New Jersey

New York

Pennsylvania

Illinois

Indiana

Michigan

Ohio

Wisconsin

Iowa

Kansas

Minnesota

Missouri

Nebraska

North Dakota

South Dakota

South region West region

South Atlantic East South

Central11

West South

Central Mountain Pacific

Delaware

District of Columbia

Florida

Alabama

Kentucky

Arkansas

Louisiana

Arizona

Colorado

Idaho

Alaska

California

Hawaii
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South region West region

South Atlantic East South

Central11

West South

Central Mountain Pacific

Georgia

Maryland

North Carolina

South Carolina

Virginia

West Virginia

Mississippi

Tennessee

Oklahoma

Texas

Montana

Nevada

New Mexico

Utah

Wyoming

Oregon

Washington

John E. Buckley

Economist, Division of Compensation Data Analysis and Planning, Office of Compensation and Working Conditions, Bureau of

Labor Statistics.

Telephone: (202) 691-6299; E-mail: Buckley.John@bls.gov. Acknowledgement: The author would like to thank Lowell Mason of the Office of Compensation and Working Conditions for

preparing special data tabulations for this article.

Notes

1 For the National Compensation Survey (NCS), the civilian sector includes workers in private industry and in State and local government. This

excludes Federal government, agricultural, and household workers.

2 See Occupational Pay Relatives, 2004, USDL 05-2382 (U.S. Department of Labor), December 28, 2005; available on the Internet at http://

www.bls.gov/ncs/ocs/sp/ncnr0002.pdf.

3 These percentages do not average to 100 because each region is weighted differently.

4 The latest NCS data on occupational wages in each of the nine census divisions can be found on the Internet at http://www.bls.gov/ncs/ocs/

compub.htm#Division.

5 See Maury B. Gittleman, "Pay relatives for metropolitan areas in the NCS," Monthly Labor Review, March 2005, pp. 46-53; available on the

Internet at http://www.bls.gov/opub/mlr/2005/03/art4full.pdf.

6 The simple pay comparisons based on published hourly rates were produced by dividing the average hourly pay for the West South Central

($17.12) and the New England division ($22.54) by the U.S. average ($19.29). Multiply the results by 100 and round to the whole number.

These averages produce simple pay comparisons of 117 and 89 for the New England and the West South Central divisions, respectively. For

example, calculations for the West South Central division are as follows: $17.12 divided by $19.29 equals 0.8875; multiply 0.8875 by 100 and

round to the nearest whole number, 0.89. Dividing the West South Central simple pay comparison (89) by the New England simple pay

comparison (117) shows that the West South Central's average hourly earnings were about 76 percent of New England's average.

7 Only production occupations and transportation and material moving occupations in the South Atlantic division had pay relatives of 99, and

these were not significantly different from the national average.

8 The Middle Atlantic census division also includes the New York, NY, Consolidated Metropolitan Statistical Area (which comprises parts of

New York, New Jersey, Connecticut, and Pennsylvania), and the Philadelphia, PA, Consolidated Metropolitan Statistical Area (which

comprises parts of Pennsylvania, New Jersey, Delaware, and Maryland).

9 The East North Central census division also includes the Cincinnati, OH, Consolidated Metropolitan Statistical Area (which comprises parts

of Ohio, Kentucky, and Indiana).

10 The West North Central census division also includes the St. Louis, MO, Metropolitan Statistical Area (which comprises parts of Missouri

and Illinois), and the Minneapolis-St. Paul, MN, Metropolitan Statistical Area (which comprises parts of Minnesota and Wisconsin).

11 The East South Central census division also includes the Louisville, KY, Metropolitan Statistical Area (which comprises parts of Kentucky

and Indiana), and the Memphis, TN, Metropolitan Statistical Area (which comprises parts of Tennessee, Arkansas, and Mississippi).

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Data for Chart 1. Census regional pay levels, relative to the U.S. national average, 2006

Census region Pay relative

Northeast 106

Midwest 99

South 94

West 105

Data for Chart 2. Pay relatives for West South Central and New England census divisions, 2006

Based on average hourly wage Factors controlled

West South Central 89 92

New England 117 109

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