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© Copyright 1998 by the Wyoming Department of Employment, Research & Planning

People may be very familiar with such terms as total wages, average employment and average wages, since these are common economic statistical terms appearing in newspapers and other publications. Researchers use these statistics to compare different economic situations and industry groups. Policy makers use them to adjust other economic data or set up policies. However, these terms can be easily misunderstood or inappropriately used if people do not know their backgrounds. The article "An Analysis of Covered Employment and Wages Payroll Data", by Tom Gallagher, in August 1998's Wyoming Labor Force Trends, pointed out that people should use these terms with caution. That study was based on the analyses of the number of firms, firms' payroll and jobs. This research, on the other hand, uses two years (1996 and 1997) of Unemployment Insurance (UI, see Glossary) wage records¹ (the earnings of individual persons) to display detailed information on Wyoming's employment structure and wage component. Hopefully, it would benefit the public and policy makers to learn more useful information about these terms.

Most people would know that the average annual wage is the result of the annual total wage divided by the average employment (average number of jobs worked). However, what kinds of workers are included in Wyoming's employment numbers? What are the corresponding wages for each worker's typical patterns of behavior? How are they affecting the total wages and average wages?

In 1997, the annual average wage increased by $824, from $21,116 in 1996 to $21,941 in 1997. Did every worker receive some kind of wage increase? How many workers really had a wage gain compared with their 1996 wages? How was 1997's wage growth distributed among different worker segments, industries and wage levels? These questions will be answered in this article.

Wage records containing eight quarters (1996Q1 - 1997Q4) of data were matched into a study database, (see Table 1) which includes a total of 347,095 unique records, one for each worker. Each person has his/her own work history: part-time, full-time, temporary work, seasonal work, multiple job holding, etc. In order to take a detailed look at the employment structure and corresponding wages, all workers were classified into the following employment segments:

1) "Worked all eight quarters in 1996 and 1997"--includes those who worked in both 1996 and 1997 for all eight quarters. During these two years, a person who worked for the same primary employer² is further defined as a "two year stable worker" and a person who changed his/her primary employer is defined as a "two year job changer."

2) "Worked in 1996 and 1997 but not eight quarters"--includes those who worked in both years but less than eight quarters. In other words, a person in this group had to work at least one quarter in 1996 and one quarter in 1997. All workers in this category are also further grouped into "worked one quarter" through "worked four quarters" for the corresponding years. For example, if a person worked only one quarter in 1996 and three quarters in 1997, then he/she will be included in the group of 17,887 employees who "worked one quarter" in 1996 and included in the group of 32,335 employees who "worked three quarters" in 1997.

3) "Worked only in 1996"--includes those who worked only in 1996, not in 1997.

4) "Worked only in 1997"--includes those who worked only in 1997, not in 1996.

All of the workers in the last two categories are also further classified into "worked one quarter" through "worked four quarters."

Wyoming had a total of 283,730 unique UI covered workers³ in 1996 and 286,360 in 1997 (see Table 1). However, only 119,062 (about 42% for each year) individuals "worked all eight quarters in 1996 and 1997." There were 97,529 stable workers and 21,533 job changers. A total of 103,933 (about 36% for each year) "worked in 1996 and 1997 but not eight quarters." In addition, 60,735 (or 21.4%) who worked in 1996 did not work in 1997 at all. In comparison, 63,365 individuals (22.1% of 1997's total) worked in 1997 but did not work in 1996.

When viewed through the lens of the typology in Table 1, wages vary substantially. First of all, it can be seen that about 70 percent of each year's total wages were earned by the segment "worked all eight quarters in 1996 and 1997," which was only 42 percent of total workers. The other 30 percent of total wages were distributed among the other types of employment segments (58% of total workers).

Second, the average quarterly wage⁴ varies significantly among different employment segments. Stable workers had higher average quarterly pay ($7,137 in 1996 and $7,556 in 1997) than any other segment. Job changers had a much lower pay ($4,463 and $4,918, respectively) than stable workers even when both segments worked for the same number of quarters. However, job changers had a much higher rate of wage increase (10.2% ) over the year than the stable workers (5.9%). The average quarterly wage among most other segments was equal to only one- to two-thirds of the quarterly earnings of stable workers. All of these findings indicate that different employment structures can affect the total wages and average wages significantly. A higher percentage of stable work opportunities would lead to a higher total wage and average wage for the state. On the other hand, a large share of temporary or seasonal work opportunities would lead those statistics in the opposite direction. In order to have a more informed comparison between state's economies or to use wage information appropriately, people need to know the employment structure behind the data.

Wyoming's total UI covered wages increased 5.2 percent (or $238,063,025) in 1997 from 1996. It was the fastest growth during the past three years (2.6% in 1995 and 3.0% in 1996). However, again, how many workers really received increases? How is the total increase distributed among industries and employment segments? The following analysis will help to answer those questions. The analysis will be based on the 119,062 employees who "worked all eight quarters in 1996 and 1997", since they shared most (70%) of the total wages and can explain 85 percent of the total wage changes (the total wage changes in this group was $202,583,180).

Table 2 shows the distribution of employment by the rate of wage change. Nearly one-third (about 27%) of the total workers had a wage decrease instead of an increase. About two percent had no changes in their wages over the year. Twenty-one percent had a "5 percent or under" increase. The differences between stable workers and job changers are:

1) stable workers had a much higher percentage of workers (40.2%) who received a moderate wage increase (10% or under) than the job changers (14.7%);

2) job changers had much higher probabilities on either tail of the distribution, wage loss (-33.2%) or large wage gain (defined as an over 25% wage increase, 36.5%), than stable workers (25.5% had a loss and 13.3% had a large wage gain).

The right side of Table 2 shows the wage changes for stable workers and job changers. The most notable information is that more than half (55.1%) of the total wage increases were shared by only 17.5 percent (or 20,870) of total employees. These individuals received over 25 percent in wage increases from 1996 to 1997.

The distribution of employment by the rate of wage increase between genders is very similar (see Table 3). In fact, female workers even had a slightly higher percentage who received a large wage gain than male workers for both stable workers and job changers. Again, both male and female job changers had higher percentages in either wage loss or large wage gain.

On an industry basis, about one-third of the persons working in Retail Trade (see Table 4) experienced a wage decrease from 1996 to 1997. Services and Construction both had about 27 percent in this wage loss group. Most of the industries gave 30 to 40 percent of their employees a "10 percent or under" wage increase, except Public Administration which had a much higher percentage (over 60%) in this range. Besides the wage loss, Retail Trade (21.4%) also led in the large wage gain group.

What kind of wage did most Wyoming workers make? How is the employment distributed at different wage levels? Which wage level is more likely to have a large increase? In order to answer these questions, employees were grouped by different wage ranges. During the two-year study, the federal minimum wage has been raised twice, from $4.25/hour to $4.75/hour on October 1, 1996, then to $5.15/hour on September 1, 1997. Using the previous research's definition⁵ that full-time workers have to work at least 35 hours a week, the full-time minimum wage worker should have an annual wage of $7,962.50⁶ in 1996. If a person's annual wage is less than that, he/she is considered a part-time worker. The Figure shows that nearly one-third (31.4%) of the total employees made an annual wage under $15,000 in 1996, which included nearly half (49.1%) of the total female workers but less than 18 percent of all male workers. On the other hand, less than one-fourth (24.5%) of the total employees earned $35,000 or more, which included nearly 40 percent of all male workers, and only 10.6 percent of all female workers. It is clear that the distribution of male and female workers by wage level is significantly different. This difference may be related to the industries and occupations in which most males and females work. Occupational information is not available for this study. However, Table 5 provides this information by industry. For example, the Mining industry has a much higher percentage (25.5%) of female workers who earned $45,000 or more annually than any other industry; but compared with the male workers (57.7%) in the same industry, they are still behind.

Table 6 shows that the lower the wage level, the higher the probability of a large wage gain (40.4% versus 7.5% for stable workers and 64.8% versus 7.1% for job changers). Most job changers (79.2%) had an annual wage under $25,000 in 1996, and they had a much better chance of getting large wage gains compared to the same wage level of stable workers. On the other hand, the higher the wage level, the more likely that the job changers would face a wage loss after they changed jobs. It may be due to the fact that the reasons behind changing jobs between lower wage levels and higher wage levels are totally different.

In summary, only 119,062 (42%) of Wyoming's total annual workers had long-term year-round jobs--"worked all eight quarters in 1996 and 1997." The majority (58%) of people who worked in the state worked on a temporary, seasonal or short-term (only one year) basis. Stable workers had a wage double or triple that of most other employment categories. This significant wage difference between each type of employee directly affects the state's total wage and average wage levels. In order to have a more stable and competitive economy, Wyoming needs more long-term year-round jobs.

More than half of the total wage increases in 1997 were shared by only 17.5 percent of total employees who "worked all eight quarters in 1996 and 1997." On the other hand, about 27 percent of employees in this segment actually experienced a wage loss. It is clear that when a state's total wage or average wage increases, it does not mean every worker has some kind of wage gain. People should carefully examine background information in each situation before using any data.

Xiaohong (Sherry) Yu is a Senior Economist, specializing in Unemployment Insurance (UI) Trust Fund projections with Research & Planning.

1 Wayne M. Gosar, "Wyoming Unemployment Insurance Wage Record Summary Statistics: A new way to look at Wyoming," Trends, May 1995.

2 Multiple job holders could have more than one employer at the same time. The primary employer is the one that the majority of their income comes from.

3 This number does not include UI covered federal civilian employees or UI covered military employees, since these two groups are not required to report their wages to the state every quarter.

4 Average quarterly wage = (sum of total annual earnings for each person in the segment/number of this segment workers)/number of working quarters for the corresponding segment.

5 Wayne M. Gosar, "Tracking Job Changers in Wyoming's Economy," July 1996. Brett Judd, "The Wyoming Wage Record Classification System," Trends, March 1998.

6 The number $7,962.50 is derived from the following equation: ($4.25 x 35 hours x 13 weeks x 3 quarters) and adding that sum to ($4.75 x 35 hours x 13 weeks x 1 quarter).

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