Table 6. Regression results on weekly salaries of engineers and secretaries, 1995

Engineer Secretary
Independent variable Parameter | Standard | Parameter | Standard
estimate error estimate error
Constant .. 495.63 14.661 353.70 3.334
Level of work
2 122.58' 2.207 67.64" 1.015
3 272.77! 2.045 132.40' 988
4 470.85' 2.033 225,.50' 1115
5 706.99" 2.111 357.57! ' 1.663
6 946.24" 2.438
7 1239.71' 3.733
8 1623.41' 9.202
Geographic ragion
North 4.43" 1.211 43.84" 847
12.05" 4401 17.15" 812
48.98" 1.091 23.71" 889
Metropolitan character |
Metropolitan area . _ oe 63.46" 1.633 35.01" 2.594
Industry
Mining ... 345.76" 14.975 125.27' 3.374
Construction 98.75° 15.160 25.13! 5.312
Manufacturing 96.40° 14.508 38.83' 2.034
Transportation and util 136.91! 14.609 41.71" 2.252
Wholesale trade .. 77.67' 15.342 9.20" 2.737
Finance, insurance and real estate 240.96! 18.244 1.642 046
Services .. 84.86! 14.533, 4.95? 2.014
State and local government 43.31" 14.550 19.42" { 2.039
Establishment size
500-999 workers... 9.74! 4.270 10.27! 1.006
1,000-2,499 workers .. 4151" 1.091 73 781
2,500 workers or more .. 27.90' | 1.337 V7? i -799
Re 0.7337 0.5313
Adjusted R? 0.7337 0.5312
Sample size 176,211 98,043

‘Significant at the 1 percent level.
?Significant at the 5 percent level.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics

23 Compensation and Working Conditions Fall 1997


Establishment size

In general, large firms pay higher
salaries than small firms. This was
not self-evident in examining wages
of establishments of different sizes.
For the most part, engineers at level
4 and above, and secretaries at all
levels, generally earned more in
establishments employing fewer than
500 workers than those in establish-
ments with 500 to 999 workers.
Those in establishments employing
1,000 to 2,499 workers earned more
than those in establishments employ-
ing 2,500 workers or more.

The relationships between
earnings and establishment size do
not necessarily show that the
establishment size determines pay.
Other factors, such as industry, may
influence both pay and establishment
size. For example, aircraft manufac-
turing is an above-average paying
industry and is usually carried out in
large establishments. Conversely,
most of retail trade is relatively low
paying and includes many very smail
establishments. Regression analysis
is useful in distinguishing between
causal relationships and incidental
correlations in cases such as these.

Regression analysis

Comparing averages of workers
with varying characteristics gives an
indication of the effect of the
characteristics but does not isolate
the effect. To better isolate the effect
of these characteristics on earnings,
weekly earnings of engineers and
secretaries were regressed against
the level of work in the occupation,
geographic region, metropolitan

} Ror comprehensive information on the 1995
survey, see Occupational Compensation Survey.
National Summary, 1995, or individual area bul-
letins. Bulletins can be purchased from the Bu-
reau of Labor Statistics, Publications Sales Cen-
tet, PO. Box 2415, Chicago, IL 60690-2145.
Electronic files are available on the Intemet’s
World Wide Web through the Bureau of Labor
Statistics’ site: stats.bls.gov/ocshome.htm

2 For a more detailed analysis of earnings by
region, see: John E, Buckley, “Occupational Pay
Actoss Regions in 1994,” Compensation and

characteristic, industry, and estab-
lishment size. The constant related
to workers employed in the lowest
level of the occupation (level 1), the
South, a nonmetropolitan area, retail
trade, and an establishment with
fewer than 500 workers. The R? of
0.7337 for engineers and 0.5313 for
secretaries indicates that the vari-
ables accounted for about 73 percent
of the variability in wages of
engineers, and 53 percent for
secretaries. (See table 6.)

The regressions based on employ-
ment characteristics of individual
workers generally confirmed the
observations about occupational
averages for workers grouped by
characteristic. For both engineers
and secretaries, wages consistently
increased as level of work became
more complex and demanded more
responsibility; the change by level
was much greater for engineers than
for secretaries.

Among regions, working in the
Northeast, as compared with the
South, was a decided advantage for
secretaries but a disadvantage for
engineers. Engineers earned more
in the West than in the other regions.
Engineers working in metropolitan
areas earned about $63 a week more
than those in nonmetropolitan areas,
and secretaries in metropolitan areas
earned about $35 a week more than
their nonmetropolitan counterparts.

Industry had a much larger effect
on earnings of engineers than on
secretaries. Engineers employed in
mining had an earnings advantage
of $346 a week over engineers in
retail trade; in finance, insurance
and real estate, the engineers’

—ENDNOTES—

Working Conditions, June 1996, pp. 35-38.

For a more detailed analysis of earnings in
metropolitan and nonmetropolitan areas, see
Elizabeth Dietz and Jordan Pfuntner, “Do Urban.
Workers Earn More Than Their Country Cous-
ins?", Compensation and Working Conditions,
June 1996, pp. 39-40.

“fn goods-producing industries, an establish-
mentis defined as a single physical location where
industrial operations are performed. In service-
producing industries, an establishment is defined

earnings advantage was $241; and in
transportation and public utilities, it
was $137. In contrast, for secretar-
ies, variation among industries was
less than $51 a week except for
mining. Salaries in mining were
$125 higher than in retail trade.

As with simple cross tabulations,
in the regression analysis, earnings
did not rise consistently with esta-
blishment size, Engineers received
less of a premium in establishments
with 2,500 workers or more than in
establishments with 1,000 to 2,499
workers. Earnings of secretaries
were more inconsistent. Secretaries
in establishments employing fewer
than 500 workers earned more than
secretaries in establishments em-
ploying 500 to 999 workers and those
employing 2,500 workers or more.

Regression studies of earning
levels were also done using the
natural logarithms of earnings,
rather than the earnings themselves.
This was done in the belief that
explanatory variables are related to
earnings in a multiplicative, rather
than additive fashion. That is, it was
hypothesized that a factor such as
industry increases earnings by a
given percent rather than by a set
dollar amount. In this article, the R?
was almost identical for the multipli-
cative and additive relationship
approaches, so neither approach was
clearly superior.

Logarithmic analysis can be more
useful when comparing the effect of
variables on occupations with
widely differing earnings. For
example, table 7 shows that engi-
neers working at leve] 2 earn 18.7
percent more than those at level I,
all else being equal.

as all focations of a company in the same area
within the same industry division. In government,
an establishment typically comprises all locations
of a government entity.

Information was not available on differences
in earnings by firm size.

* Regressions done separately for each occupa-
tional level, and thus not having level as a variable,
accounted for less than a quarter of the variability
for all levels of engineers and secretaries, and 11
percent or less for 8 of the 13 occupations/levels.

Compensation and Working Conditions Fall 1997 22


Table 7. Regression results on natural logarithms of weekly salaries of engineers and secretaries, 1995
Engineer Secretary
Independent vari ~
viable Parameter | Standard Effect Parameter | Standard Effect
estimate error (inpercent) | estimate error {in percent)
6.315 0.013 5.873 0.006
0.171" 0.002 18.7 0.160" 0.002 17.3
0.345" 0,002 41.2 0.287" 0.002 33.3
0.536" 0,002 70.9 0.444' 0.002 55.9
0.722" 0.002 105.9 0.625" 0.003 86.7
0.878' 0.002 140.7
1.039" 0.003 182.8
1,213" 0.008 236.3
Geographic region
Northeast 0.000 0.001 0 0.081" 0.002 8.5
0,014" 0.001 14 0.035" 0,002 3.6
0.046" 0.001 47 0.046' 0.002 47
Metropolitan character
Metropolitan area . 0.068" 0,001 7.0 0.077" 0.005 8.0
Industry
Mining .. 0.281! 0.013 32.5 0.006 25.0
Construction . 0.089" 0.013 9.3 0.010 49
Manufacturing 0.096' 0.012 10.0 0.004 76
Transportation 0.140" 0.013 15.1 0.004 78
Wholesale trade 0.078" 0.013 8.1 0.005 at
Finance, insurance and real estate . 0.216" 0.016 241 0.004 al
Services... 0.083" 0.012 87 0.004 +9
State and local government 0.049" 0.012 5.0 0.004 43
Establishment size
500-999 workers ... 0.012" 0.001 12 0.018" 0.002 17
1,000-2,499 workers 0.038! 0.001 3.9 0.005" 0.001 5
2,500 workers or more 0.028" 0.001 28 0.001 0.001 a
Re 0.7422 0.5298
Adjusted R? 0.7422 0.5297
Sample size 176,211 98,043

' Significant at the 1 percent level.
2 Significant at the 5 percent level.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics

Compensation and Working Conditions Fall 1997

24



Kenneth J. Hoffmann

Kenneth J. Hoffmann is an economist in the Di-
vision of Compensation Data Analysis and Plan-
ning, Bureau of Labor Statistics. Telephone
(202) 606-6201. Albert E. Schwenk, also of the
Division of Compensation Data Analysis and
Planning, assisted with the regression analysis.

Analyzing Wage Patterns
of Engineers and

Secretaries

Engineers traditionally earn much more than secretaries, and both
groups’ salaries can vary significantly depending on area of the
country, level of work, size of firm, and other factors. This article
identifies these factors and uses regression analysis to isolate their

effect on earnings.

““~ ngineers averaged about

EK $46,600 a year in 1994, and
f secretaries averaged about

$26,700, according to the Bureau’s
Occupational Outlook Handbook.
In both cases, wages of individuals
varied widely within these occupa-
tions. This article examines earn-
ings data obtained for these occupa-
tions in the Bureau’s 1995
Occupational Compensation Survey
(OCS) program, to determine how
selected factors contribute to
variation in earnings, and to
determine whether these major
professional and clerical occupations
are affected in the same way.!

Level of work

Level of work was found to be the
most important indicator of engi-
neers’ salaries. The OCS program
studies eight levels of engineers,
distinguished primarily by the
difficulty of the work and its
importance to the organization.
About 75 percent of the engineers
were found at levels 3 through 5 (the

19 Compensation and Working Conditions Fall 1997

to

two journey levels and first advanced
level). Workers in the eight levels
averaged about $1,122 a week or
$58,344 a year in 1995. Engineers
at the entry level earned less than a
third as much as the highest level of
engineers studied, $664 a week
versus $2,323. (See table |.) Differ-
ences in average earnings between a
level and the next higher Jevel
ranged from 18 to 22 percent.

The level of work had far less
effect on earnings of secretaries than
on engineers. The OCS program
divided secretaries into five levels
according to the position of the
secretary’s supervisor and the degree
of responsibility of the secretary. As
shown in table 2, the highest level
secretaries averaged $793 a week, or
about twice as much as the lowest
level, $379 a week. About two-
thirds of the secretaries were found
at the second and third levels.

From 1960 to 1990, the Bureau
conducted occupational wage
surveys, studying the wages of
professional occupations on a


Table 1. Average weekly earnings of engineers by selected characteristic, 1995

|
Characteristic Love
1 2 3 4 5 6 7 8
$664 $790 $943 | $1,149 | $1,389 | $1,634 /$1,935 | $2,323
659 775 940 1,134 1,352 1,600 | 1,908 2,190
638 779 925 1,148 1,389 1,668 | 1,856 :
681 794 934 1,140 1,387 1,574 | 1,917 :
694 813 981 1,169 1,420 1,657 | 2,006 2,300
Type of area
Metropolitan ... 674 795 950 1,152 1,392 1,638 | 1,934 2,323
Nonmetropolitan 605 755 871 1,106 1,313 ~ : .
Industry
Private industry 666 793 943 1,155 1,397 1,650 | 1,943 2,326
Goods producing 679 797 941 1,152 1,400 1,664 | 1,983 2,354
Manufacturing .. 677 796 940 1,147 1,392 1,653 | 1,972 2,348
Service producing .. 644 782 949 1,163 1,388 1,610 | 1,843 2,245
Transportation and utilities 2 843 1003 1,188 1,384 1,628 - .
Services 638 763 926 1,150 1,388 1,610 | 1,838 :
State and local government 650 775 946 1,095, 1,264 1,349 . -
Establishment size I
Fewer than 500 workers 626 752 917 1,148 1,409 1,641 1,933 -
500 - 999 workers .. 662 792 950 1,134 1,376 1,619 | 1,887 -
1,000 - 2,499 worker 706 818 975 1,178 1,414 1,696 | 1,971 2,305,
2,500 workers or more ...... 707 817 949 1,140 1,371 1,606 | 1,923 2,365
NOTE: Dashes denote that data do not meet publication criteria.
Table 2. Average weekly earnings of secretaries by selected characteristic, 1995
Level
Characteristic
1 2 3 4 5
All. $379 $470 $547 $651 $793
Region
Northeast 405 489 570 673 805,
South 368 436 511 606 740
Midwest 394 465 546 633 809
West... 380 523 574 671 800
Type of area
Metropoman ‘ 388 474 550 652 794
Nonmetropolitan .. “7 | 427 491 608 -
Industry
Private industry 391 | 480 552 661 799
Goods produ 431 499 569 672 804
Manufacturit 430 497 567 670 800
Service producing 380 475 544 653 796
Transportation and utilities 416 506 $71 682 833
Wholesale trad 389 480 554 638 829
Retail trade .. 379 468 524 632 -
Finance, insurance, an
real estate .. 396 494 541 649 788
Services .. 369 459 541 655 789
‘State and local government. 365 454 530 617 736
Establishment size
Fewer than 500 workers 373 466 548 676 851
500 - 999 workers ... 373 454 545 650 789
1,000 - 2,499 workers 381 495 550 654 786
2,500 workers or more 391 465 545, 635 778
NOTE: Dashes denote that data do not meet publication criteria,
Compensation and Working Conditions Fall 1997 20



national basis, while clerical jobs
were studied on a local and national
basis. The assumption that profes-
sional pay is determined on a
national basis, while the labor
market for clerical jobs is local, was
a rationale for design of the study.
Beginning in 1991, the Bureau
began studying local wages for
selected professional occupations, so
it is now possible to compare wage
patterns for professional and clerical
workers on a national, regional, and
local basis.

Geographic region

As expected, regional wage
differences were much smaller for
engineers than for secretaries. (See
table 3.) Differences in average
earnings between the highest and
lowest paying regions ranged from 3
to 9 percent for the eight levels of
engineers, while differences for
secretaries ranged from 9 to 20
percent. Typically, earnings were
highest in the West for both groups.
Earnings of secretaries at all levels
were lowest in the South, but the
pattern was mixed for engineers.
Each region but the West had the
lowest earnings for at least one level
of engineers.

Table 3. Relative pay levels for engineers
and secretaries by region, 1995

Engi- | Secre-

Region neers taries
United States 100 100
Northeast 98 102
South 99 94
Midwest 99 100
West ........ 103, 106

NOTE: United States excludes Alaska
and Hawaii

Metropolitan area

In order to compare earnings
among metropolitan areas, average
earnings for all levels of an occupa-
tion in an area were combined,
apportioning workers among levels
in the same proportion as they were
nationally. Because data collection
occurred at different times of the
year for localities, averages were
then adjusted for differences in the

time areas were surveyed. The
adjusted averages were then divided
by the national average to produce
relative pay levels. For example, the
relative pay of 111 for engineers in
Oakland, California shows engineers
in that area earned 11 percent more
than the national average. Likewise,
the pay relative of 90 for St. Louis,
Missouri-Iilinois indicates earnings
in that area were 10 percent below
the national average.

Table 4 shows that regional
averages are not good indicators of
area averages. Three California
areas—Oakland, San Francisco, and
Anaheim—were among the areas
with highest average earnings for
engineers, while two California
areas, Sacramento and San Diego,
were among the lowest paying.
Comparing tables 4 and 5 also shows
that relative pay levels for one
occupation are not necessarily good
indicators of pay levels for another
occupation. For example, New
Orleans was among the highest
paying areas for engineers and
among the lowest paying for
secretaries.

As expected, the difference
between highest and lowest pay was
larger for metropolitan areas, e.g.,
Oakland versus St. Louis, than for
economic regions, e.g., West versus
South. The percent difference
between highest and lowest areas
was greater for secretaries than for
engineers.

Table 4. Relative pay levels for engi-
neers in metropolitan areas with highest
and lowest average pay, 1995

4

Highest | Lowest
— 1
Oakland,CA | 111 | Kansas City,
MO-KS 94
San Francisco, Sacramento, ;
CA 108 | CA 94
Houston,Tx | 107 | San Diego,
Anaheim,CA | 105] CA 94
New Orleans, | Atlanta,GA | 93
LA 105 | Milwaukee,WI) 93
Philadelphia, St. Louis,
PA-NY 103 | MO-IL | 9

NOTE: United States, excluding Alaska and
Hawaii, equals 100. Based on compari-
‘sons for 45 metropolitan areas.

21 Compensation and Working Conditions Fall 1997

Table 5. Relative pay levels for secretar-
ies in metropolitan areas with highest
and lowest average pay, 1995

Highest Lowest
New York, NY | 119 | New Orleans,
San Francisco, LA 92
CA 119 | Salt Lake City,
Los Angeles, UT 92
CA 115 | Phoenix,AZ | 87
Oakland, CA | 113 | Corpus
Anaheim, CA | 111 | Christi, TX 86
Bergen-
Passaic, NU i 111
Detroit, MI I 114

NOTE: United States, excluding Alaska and
Hawaii, equals 100. Based on compari-
sons for 58 metropolitan areas.

Type of Area

The number of engineers and
secretaries at the highest levels was
not sufficient to publish average
earnings for these levels in nonmetro-
politan areas. At the lower levels,
earnings were consistently higher in
metropolitan areas than in non-
metropolitan areas—between 4 and
11 percent higher for engineers, and
7 to 12 percent higher for secretaries.

Industry

Both engineers and secretaries
had higher average earnings in
private industry than in State and
local governments. The percentage
differences between the major
industry groups paying the highest
and lowest wages were larger for
secretaries than for the four lowest
levels of engineers. Among private
industries, engineers were primarily
employed in manufacturing, trans-
portation and utilities, and services,
which includes engineering and
architectural services. Within these
groups, the transportation and
utilities industry division was clearly
highest paying, while the services
division was the lowest paying for
the three lowest levels. Above level
3, the pattern was not as distinct.

Secretaries were more evenly
distributed among private industries.
Their earnings were highest in
transportation and utilities or
manofacturing, and lowest in retail
trade or services, similar to the
pattern for engineers.