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© Copyright 1998 by the Wyoming Department of Employment, Research & Planning
| "What it really comes down to is that what one earns buys less than it did the year before. This means that the average Wyoming wage earner's salary does not quite buy what it used to a few years ago." |
Over the last few years, Research & Planning (R&P) has been pioneering the use of the wage records database in several studies. For the most part, this database has been combined with other available files from programs like Covered Employment and Earnings (ES-202, see Glossary), Driver's License, and Job Training Partnership Act (JTPA) in order to answer the research questions posed by the studies. Some of these studies have been published in previous issues of Wyoming Labor Force Trends 1. This article uses a comparison between wage records and the Consumer Price Index (CPI, see Glossary) to answer the following two questions: Has one's wages in Wyoming kept up with inflation? Does a person have the same buying power that he/she had back in the early nineties? For the average Wyoming wage earner, the answer to both of these questions is "not quite," according to this comparison.
The rate of inflation used in this article is the percent increase in the CPI this quarter, compared to the CPI the same quarter the previous year. Wage records 2 is a database containing wage information for individuals that is derived from Unemployment Insurance (UI, see Glossary) tax records. These tax records are collected on a quarterly basis3. An average wage (AW) for each quarter is calculated by dividing the total wages paid by the number of individuals (Social Security Numbers, SSN's) that worked in the quarter. A percent increase in the average wage (PIAW) is calculated by using the following formula where 98Q1AW is wage records' average wage for the first quarter of 1998: ((98Q1AW-97Q1AW)/97Q1AW*100).
Please permit a slight sidetrack for clarification purposes. The ES-202 program also maintains a database derived from the UI tax records. These data are collected on the firm level for each quarter. This program calculates an average weekly wage (AWW, which has been published in past Trends and in this issue, "Covered Employment and Wages for First Quarter 1998") by dividing the total wages paid by the average number of jobs 4 worked then dividing that number by 13 (the number of weeks in a quarter). Thus, wage records’ average wage is by individual and ES-202’s average wage is by job.
R&P began collecting wage records data in 1992, so the first percent increase in the average wage available is in the first quarter of 1993. Therefore, this comparison between growth rates of the CPI and the average wage from wage records begins with the first quarter of 1993. Out of the 21 quarters in this comparison, there are 13 (61.9%) in which the growth of the CPI exceeded that of the overall average wage (see Figure 1). The longest consecutive number of quarters in which the growth of the CPI exceeded that of the average wage was eight. This occurred from the fourth quarter of 1994 to the third quarter of 1996. This was also a period of out-migration5. The longest period in which the growth of the average wage exceeded that of the CPI was four quarters. This was the four most current quarters (97Q2 to 98Q1). On the average, the percent increase of the CPI exceeded the growth of the average wage by 0.1 percent during this period.
Wage records also shows how many UI covered jobs an individual worked in a particular quarter. However, it doesn't show if these jobs were worked at the same time. Individuals may be working more than one job at the same time and/or changing jobs and working them in succession, but this information is still useful. Because this is known, individuals can be separated into categories 6 by number of jobs worked in a quarter and the same statistics can be calculated like those done with the whole of wage records. The same comparison can be applied to these new categories of job holders. The average one job worker is in about the same boat as the overall average worker due to the fact that 85-89 percent of the individuals on wage records are one job workers. The CPI exceeded the one job worker average wage in 11 of the 21 quarters by an average of 0.1 percent (see Figures 2 and 3). The wages of the two, three and four or more job workers managed to out pace the CPI by an average of 1.1, 1.2 and 2.4 percent, respectively.
What does it mean to have a percent increase in wage that is less than inflation? What it really comes down to is that what one earns buys less than it did the year before. This means that the average Wyoming wage earner’s salary does not quite buy what it used to a few years ago. Even though two, three and four job workers did on average out pace inflation, their gains and losses were more erratic. They not only had losses due to inflation, but they had actual losses in the average wage in some quarters. They also had earnings that were far less than their one job worker counterparts.
Norman Baron is an Economist, specializing in Labor Market Information with Research & Planning.
1 A representative list of previous Trends articles:
Gayle C. Edlin, "Steady Work Pays Off: Wyoming
Unemployment Insurance Wage Records Revisited,"
October 1995, pp. 1-6.
Brett Judd and Gregg Detweiler, "The Relation of Age
and Gender to Employment in Wyoming: Part One of a New Analysis Utilizing Wage
Records," May 1996, pp. 1-4.
Brett Judd, "The Wyoming Wage Record Classification
System," March 1998, pp. 1-3.
Sherry Yu, "An Analysis of Wyoming’s Employment
Structure and Wage Component: A Survey of Conditions,"
September 1998, pp. 9-14.
2 Wayne M. Gosar, "Wyoming Unemployment Insurance Wage Record Summary Statistics: A New Way To Look At Wyoming," Trends, May 1995, pp. 4-5.
3 Norman Baron, "Wyoming Unemployment Insurance Wage Record Summary Statistics Update," Trends, October 1998, pp. 4-5.
4 The ES-202 program collects employment figures from firms on the 12th of each month and calculates the average number of jobs in a quarter by summing the employment for each of the three months in the quarter and dividing that number by three ((Mo1+Mo2+Mo3)/3).
5 Phil Brooks and Mike Evans, "Population Migration Flows Among the Mountain & Plains States," Trends, September 1998, pp. 6-8.
6 Brett Judd, "Wyoming Unemployment Insurance Wage Record Summary Statistics," Trends, November 1996, p. 10.
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