Interstate Competition for Labor: Wages
Job vacancies occur in Wyoming as a result of increased demand or industrial growth, turnover, and replacement need. The focus of this chapter is out-migration as a determinant of increased labor demand in Wyoming. We will focus on the five most likely destination states and assess the interstate competition for labor. The analysis in this chapter necessitates an introduction to data generated by the U.S. Department of Labor's Bureau of Labor Statistics (BLS) from the State-Federal Occupational Employment Statistics (OES) wage survey program. We will also demonstrate how these resources are used in applied research. The data used in this chapter are available from our Internet site.
Our analysis indicates that wages paid in Wyoming are lower for almost all occupations compared to destination states and the national average. Further, it is found that the difference in wages between Wyoming, destination states, and the nation increases as the level of education/experience needed to work in an occupation increases. This chapter shows that, in an interstate labor market, Wyoming is finding it difficult to compete with respect to wages. The data and method used to conduct this analysis are available in Appendix A.
Wage rates in Wyoming are often lower than in other states. A review of Table 5-1 shows that medicine and health services manager (OES Code 15008)16 has an average wage nationally of $25.17/hour. In Wyoming, the same occupation pays $22.09/hour, and in Alaska it pays $27.74/hour. The column titled wy_p represents Wyoming's wage relative to the national average wage. In this example a medicine and health services manager is generally paid 12.2 percent less in Wyoming and 10.2 percent (ak_p) more in Alaska than in the U.S. The complete "Occupation, Wage and Employment Table" has the same information for all available occupations for each of the 50 states and is available via our Internet site.
Applied Research using the "Occupation, Wage, and Employment Table"
It is common belief that Wyoming exports one of its most important resources each year--young workers. What factors could lead high school or college graduates to seek employment elsewhere? Two factors, employment opportunities and wages, become more important as individual investment in human capital increases. Although not an exhaustive list, other factors such as location, quality of life, and cost of living play an important role in a decision to relocate. This section will focus on the difference between wages in Wyoming, the U.S., and five destination states for out-migration from Wyoming.17 Further, we will also show that as the education/experience level necessary to work in occupations increases, so does the difference in the wages between Wyoming and all but one of the six areas considered.
While the data provided in the "Occupation, Wage and Employment Table" breaks the typical education/experience into twelve levels, five aggregate levels were chosen for this analysis (see Table 5-2).
To further reduce the presentation of data, only five states and the U.S. were used in the analysis. The purpose of this research is to see if wages in other states compared to Wyoming could have an influence on a individual's decision to relocate. Only the five most likely destination states for people leaving Wyoming were included in the analysis. A review of Internal Revenue Service (IRS) data18 reveals that these five states (California, Colorado, Montana, Texas and Utah) have been consistently the highest destination states for migration from Wyoming since 1992 (the first year of data available).
Grouping the data on education/experience level and calculating the weighted-average wage, as described in Appendix A, produces Table 5-3. The percent differences in wages relative to Wyoming were calculated to compare the destination states and the U.S. to Wyoming. For example, California's average wage for an occupation requiring a bachelor's degree is $26.82/hour. In contrast, the wage in Wyoming is $18.86/hour. California's wage relative to Wyoming's is the difference between California and Wyoming's wage, divided by Wyoming's wage. Looking at the second part of Table 5-3 reveals that occupations requiring a bachelor's degree pay approximately 42.2 percent more in California than in Wyoming.
The data from the lower tier of Table 5-3 was used to create Figure 5-1. Wyoming is represented in this Figure as the 0 percent axis. Bars to the right of the 0 percent axis represent states paying higher wages for the specified education/experience level. Bars to the left represent states paying lower wages for the specified education/experience level. As the education/experience level needed to work in an occupation increases, so does the difference between Wyoming's and the destination state's wages. This holds true for all states, except Montana which pays less for all but one education/experience level. For post secondary training/ associate's degree occupations, Montana pays slightly higher wages ($13.67) than Wyoming ($13.53)--(see Table 5-3).
This analysis does not account for other factors affecting an individual's or a family's decision to relocate. It does account for one that becomes more important as an individual invests more in education and training (human capital), a return on investment in the form of wages. Chapter 6 introduces another resource developed by Research & Planning (R&P) and explores the opportunity structure of labor markets in Wyoming, the destination states, and the nation. "Occupational Staffing Patterns and Wages" are used to compare private to public sector employment opportunities in these areas.
16 OES code is a unique number assigned to an occupation. Further information is available from the Bureau of Labor Statistics Internet site.
17 According to the Statistical Information Service of the Internal Revenue Service (IRS), the five states to which Wyoming residents are most likely to relocate are Colorado, Utah, Montana, Texas, and California.
18 Phil Brooks and Mike Evans, "Population Migration Flows Among the Mountain & Plains States," Wyoming Labor Force Trends, September 1998.
Last modified on August 10, 2001 by Valerie A. Davis.