© Copyright 2003 by the Wyoming Department of Employment, Research & Planning
Identifying Potential Living-Wage Employment Growth Opportunities in Wyoming
by: Mark Harris, Ph.D., Sociologist
"Results indicate that, on average, Manufacturing and Finance & Insurance are the most underrepresented industries in Wyoming that pay a living wage."
Previous research conducted by Research & Planning (R&P) indicates that Wyoming’s economy has grown and become more diversified over
time.1 To sustain the expansion and further diversification of the economy, Wyoming will need to continue creating jobs. It is preferable that a significant proportion of job growth occurs in high wage employment. One potential strategy to diversify and strengthen Wyoming’s economy is to attract jobs in industries paying a living wage that are underrepresented in comparison to bordering
states.2 High paying industries that are overrepresented can continue to grow, but perhaps not at rates that hinder diversification and leave Wyoming more vulnerable than bordering states to global economic events. Economic comparisons with bordering states are useful because, in addition to geographic proximity, they share, to some degree, a similar climate, natural resource base, culture, and political environment.
In this article R&P presents employment totals and proportions in Wyoming and bordering states (i.e., Colorado, Idaho, Montana, Nebraska, South Dakota, and Utah). We then calculate the Wyoming employment change to reach equivalency (ECRE) with industry proportions in bordering states. For industries with a smaller share of employment in Wyoming (i.e., proportionately underrepresented industries), the ECRE measure is an indicator of potential economic development. Additionally, we show the annual average wage by industry and express it as a percentage of the federal poverty guideline3 to identify industries that pay a living wage.
Results indicate that, on average, Manufacturing and Finance & Insurance are the most underrepresented industries in Wyoming that pay a living wage. Retail Trade and Accommodation & Food Services, on the other hand, are the most overrepresented industries paying below a living wage.
Data for this article are derived from the Bureau of Economic Analysis (BEA) Tables SA27 (full- and part-time wage and salary employment) and SA07 (wage and salary disbursements).4 This is the first year BEA published data in the North American Industry Classification System (NAICS)5 format. The advent of NAICS offers a new way to examine the industry structure of employment. NAICS is the first industry classification system specifically designed to aggregate units that utilize similar production processes. Arguably, NAICS better reflects major changes in technology and the growth and diversification of services than does the older Standard Industrial Classification (SIC) system.6
Our ECRE measure is determined by: 1) comparing the relative share of industry employment in Wyoming with the relative share of industry employment in the bordering state, 2) determining the total industry employment needed in Wyoming to reach the proportion of industry employment equivalent to the industry proportion in the comparison state,7 and 3) calculating the difference between employment needed in Wyoming and current industry employment in Wyoming. The difference between these two figures represents the employment change to reach equivalence with industry proportions in the comparison state. Positive ECRE numbers indicate underrepresented industries in Wyoming or areas of potential employment growth.
Poverty guidelines are determined by the Department of Health and Human Services.8 The Economic Policy Institute indicates that a minimum “living wage” is often defined as 100 percent of the federal poverty guideline for a full-time, full-year worker in Wyoming supporting a family of four (i.e., $18,400 for 2003).9 The tables in this article show annual average wages by sector relative to 100 percent (i.e., $18,400) of the federal poverty guideline. A more meaningful “living wage” definition is annual earnings at or above 130 percent of the federal poverty guideline for a family of four (i.e., $23,920 for 2003). Across most jurisdictions, recipients become ineligible for governmental assistance (e.g., Food Stamps) with earnings at 130 percent of the poverty guideline.10 As such, industries paying this level of annual average wages to their employees represent a smaller assistance liability to governmental support programs than industries paying below this level.
Tables 1, 2, 3, 4, 5, and 6 show nonagricultural private employment and annual average wage by industry11 for Wyoming and bordering states. The tables also show the percent of total employment, annual average wage12 expressed in dollars and as a percent of the federal poverty guideline for a family of four, and the ECRE. For the ECRE, negative numbers indicate the amount of employment reduction needed in Wyoming to achieve proportional equivalence with the comparison state. Positive numbers on the other hand indicate the amount of employment growth needed in Wyoming to achieve proportional equivalence.
Figure 1 shows the percent of total private nonagricultural employment in Wyoming and its bordering states for 14 of the NAICS industries shown in Tables 1, 2, 3, 4, 5, and 6. Utilities; Transportation & Warehousing; Information; and Other Services are not shown in Figure 1 because they are not disclosable due to confidentiality issues. Figure 1 provides a graphical means of identifying over and underrepresented industries relative to bordering states. The predominant pattern for Wyoming is underrepresented industry employment relative to bordering states. Industry employment is underrepresented in comparison to all bordering states in Manufacturing; Wholesale Trade; Finance & Insurance; Administrative & Waste Services; and Educational Services. It is underrepresented in comparison to at least four or five states for Professional & Technical Services; Management of Companies & Enterprises; Health Care & Social Assistance; and Arts, Entertainment, & Recreation. Wyoming has overrepresented employment in several industries, most notably in Mining; Construction; and Accommodation & Food Services. Retail Trade is also overrepresented, except in comparison to Montana.
Table 7 summarizes the ECRE numbers across all six bordering states. The average ECRE indicates that underrepresented NAICS industries paying above a living wage (i.e., 130% of the poverty guideline for a family of four) in Wyoming include Manufacturing (+14,920 jobs), Finance & Insurance (+4,629 jobs), Wholesale Trade (+3,395 jobs), Professional & Technical Services (+2,698 jobs), Management of Companies (+1,669 jobs), and Health Care (+1,202 jobs). Overrepresented industries paying below a living wage include Accommodation & Food Services (-7,876 jobs) and Retail Trade (-1,945 jobs).
Figure 2 simultaneously identifies industry over- or underrepresentation relative to bordering states (i.e., the ECRE scores shown in the upper or lower quadrants) and whether the industry pays above or below a living wage (i.e., annual average wages above and below 130% of the federal poverty guideline shown in the left or right quadrants). It also aids in understanding the consequences of industry growth. Specifically, employment growth in the industries shown in Quadrant A will, all else being equal, lead to both greater industry employment diversity in Wyoming and a higher annual average wage (i.e., a double positive). Employment growth in the industries shown in Quadrant B will, all else being equal, increase the annual average wage but diminish industry employment diversity. Growth in employment in the industries in Quadrant D will, all else being equal, increase industry employment diversity but decrease the annual average wage. Growth in employment in the industries shown in Quadrant C will, all else being equal, decrease industry employment diversity and decrease the annual average wage (i.e., a double negative).
Growth in Manufacturing, Finance & Insurance, Wholesale Trade, Professional & Technical Services, Management of Companies & Enterprises, and Health Care & Social Assistance will lead to higher wages for Wyoming workers and decrease vulnerability to economic change by increasing the level of industry employment diversity. Among these six industries, Manufacturing offers the greatest employment growth potential (+14,920 jobs) above a living wage. Growth in Mining and Construction will lead to higher wages for Wyoming workers but will likely increase vulnerability to the economy by diminishing the level of industry employment diversity. Growth in Administrative & Waste Services; Educational Services; and Arts, Entertainment, & Recreation will lead to greater industry employment but will, unfortunately, decrease the annual average wage. Growth in Retail Trade and Accommodation & Food Services has the double disadvantage of both decreasing industry employment diversity and reducing the annual average wage.
In the future R&P will examine the industry and wage structure for jobs created from new businesses in the state to see whether employment growth is occurring in underrepresented industries that pay a living wage.
1Mark Harris, “Is Wyoming’s Economy Diversifying and is Economic Diversity in Wyoming Desirable?” Wyoming Labor Force Trends, September 2002, pp. 1-9.
2Specifically, we define a living wage as 130% of the 2003 federal poverty guideline for a family of four (i.e., $23,920).
3Department of Health and Human Services, Federal Register, January 7, 2003, 68(26), pp. 6456-6458.
4Bureau of Economic Analysis, SA27 - Full-Time and Part-Time Wage and Salary Employment by Industry, 2001 and SA07 - Wage and Salary Disbursements by Industry, 2001, 2002, http://bea.gov (May 9, 2003). The vast majority of earnings and employment data utilized by the Bureau of Economic Analysis are originally produced by state research offices, such as Research & Planning, as part of the Bureau of Labor Statistics’ Covered Employment and Wages program.
5Office of Management and Budget, Executive Office of the President, North American Industry Classification System United States, 2002. The structure of NAICS is hierarchical. The first two digits of the structure designate the 20 NAICS sectors into which all industries are classified. The analysis in this article focuses on nonagricultural private employment. As such, Agriculture, Forestry, & Fishing (11) and Public Administration (92) are excluded. For a full listing of NAICS codes with associated titles and linked descriptions see http://www.census.gov/epcd/naics02/naico602.htm.
6Office of Management and Budget, Executive Office of the President, North American Industry Classification System United States, 2002.
7For any given sector the algebraic equation needed to solve for the sector in question is x / (t+x) = p, where t = total employment in all sectors in Wyoming minus the sector in question, p = the proportion of employment in the sector in question in the comparison state (e.g., Colorado), and x = sector employment total needed in Wyoming to match the relative share in the comparison state. Solving for x in the above equation produces the total needed to obtain proportional equivalence. The reader should understand that the level and distribution of employment for all other sectors in Wyoming are held constant while solving for x.
8Department of Health and Human Services, Federal Register, January 7, 2003, 68(26), pp. 6456-6458.
9Economic Policy Institute, Living Wage Frequently Asked Questions, n.d., http://www.epinet.org/Issueguides/livingwage/livingwagefaq.html (February 13, 2003).
11Not all NAICS sector employment can be disclosed due to confidentiality issues. Non-disclosure can be caused by having less than three employers in a given sector or where a single employer makes up more than 80 percent of employment in a given sector. For these sectors, we are unable to determine their relative representation. However, the fact that they are not disclosable is, to some degree, an indicator of underrepresentation in the state.
12Bureau of Economic Analysis data report a count of jobs rather than persons. The “job specific” annual average wage presented here overestimates the “person specific” annual average wage when more than one person occupies a given job in a single year. Additionally, no distinction is made between full- and part-time employment.
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