Interstate Competition for Labor: Public vs. Private Employment Opportunity
This chapter examines another factor that becomes increasingly important to individuals with an investment in advanced education. A recent study indicates that private sector employment pays higher wages than public sector (government) employment. An article in the May, 1996 issue of Monthly Labor Review entitled "The Public-Private Debate: What Do the Data Show?"19 had the following conclusions:
At the low end of the pay scale, state and local governments generally paid better than private industry did.
Among white-collar jobs, private industry usually paid better than state and local governments did.
Among white-collar jobs, within occupations, as pay rose with the level of duties and responsibilities, the private sector paid increasingly better wages.
State and local government pay lagged far behind that of private industry for professional and administrative occupations.
Securing the potential to increase earnings plays a role in individual and family decisions to relocate. This chapter focuses on the opportunities available for private sector employment in Wyoming compared to five destination states, and the nation. Further, our analysis demonstrates that as the education required to work in a specific occupation increases, the opportunities for private sector employment in Wyoming decrease relative to destination states, and the nation.
Industrial and Occupational Staffing Patterns
The data from the National Industry-Occupation Employment Matrix developed by the Bureau of Labor Statistics (BLS) form the foundation of this analysis. The 1998 matrix data were developed primarily from the Occupational Employment Statistics (OES) survey (discussed in the previous chapter), the Current Employment Statistics (CES) survey, and the Current Population Survey (CPS).20 The data include information on employment for over 240 detailed industries and more than 500 detailed occupations within these industries.
Research & Planning (R&P) aggregated this extensive data set to the 2-digit industry level while maintaining the detailed occupations. The result is the "Industrial and Occupational Staffing Patterns" available on our web-site in Excel format. Table 6-1 shows the 20 most frequently occurring occupations in coal mining at the 2-digit industry level (SIC 12).
Combining data collected from the ES-202 program (Unemployment Insurance (UI) covered employment and wages) with information in the staffing pattern table, we can estimate the number of employees working in a specific occupation within the 2-digit industry. For example, the 1998 ES-202 data showed annual employment in coal mining of 4,504 jobs. We know from the staffing patterns (Table 6-1) that 17.7 percent of the individuals employed in coal mining work in mining, quarrying, and tunneling occupations. Multiplying 4,504 (total employment in SIC 12) by 17.7 percent yields 797 individuals in this detailed occupation. Table 6-1 only lists the first 20 occupations that occur most frequently in SIC 12; the actual data on our Internet site provides a breakdown of SIC 12 among 67 occupations.
1998 National Covered Employment and Wages
The BLS recently released the 1998 Covered Employment and Wages database for all 50 states and the nation on compact disk. We extracted the data for Wyoming, the destination states, and the nation for total employment in 2-digit industry by ownership. The ownership code defines whether the employment occurred in the public (government) or private sector.
Applied Research: Interstate Competition for Labor-- Public and Private Employment Opportunity
The UI covered employment data were merged with the staffing patterns for each 2-digit industry. This step allowed the inference of occupation and subsequently the educational level typically required for the occupation. The total employment in a 2-digit industry was multiplied by the percent of occupations within the 2-digit industry, as in the example given previously. This procedure was used for all 2-digit industries in Wyoming, destination states, and the U.S. Lastly, the resulting data set was aggregated to groups by area name (state or U.S.), educational levels (categorized in the previous chapter), and ownership (public or private sector).
Table 6-2 shows that the percent of total UI covered employment in the public sector is higher in Wyoming (20.8%) than all other areas considered (i.e., California's public sector employment only comprises 13.0 percent of that states' total UI covered employment). High levels of public sector employment are not uncommon for rural states, as the services generally provided by state, federal, and local governments are as much a necessity to consumers and clients in less populated areas as they are in urban areas.
It is also important to note that the total employment in Wyoming in Table 6-2 is lower than the total employment shown in ES-202, published as Wyoming 1998 Covered Employment and Wages by R&P. To maintain consistency of the data from state to state, national covered employment and wages data21 provided by BLS were used. The BLS data contain entries where employment and wages are suppressed due to confidentiality. Employment for suppressed data was counted as zero; therefore, when summed, the total will not equal actual total employment. We compared the results generated from the BLS data with the micro-level data of Wyoming's ES-202 database, and they were proportionally similar.
Table 6-3a shows for Wyoming, destination states, and the nation the percent of employment in private sector industry for each typical education/experience level. For example, referring to Table 6-2, we know that there were 27,456 individuals in Wyoming employed in occupations typically requiring a Bachelor's, Bachelor's with Experience, or a Master's degree. Of these, 16,327 (or 59.5 %) were employed in the private sector. Wyoming shows the lowest percent of private sector employment across all education/experience levels. For example, the percent of private sector employment in Wyoming for occupations requiring a Bachelor's to Master's degree is 59.5 percent. In contrast, 73.0 percent of the employment for occupations requiring a Bachelor's to Master's degree in Colorado are in the private sector. This is not to say that private sector jobs in Wyoming are less likely to require Bachelor's to Master's level education, rather there are fewer opportunities for private sector employment utilizing an individual's advanced education.
Table 6-3b presents the difference between the destination states, the U.S., and Wyoming's private sector employment by education/experience level. For example, 13.5 percent more of the employment in occupations requiring a Bachelor's/Bachelor's with Experience/Master's are in the private sector in California (73.0%) than in Wyoming (59.5%).
Labor Demand, Wages, and Public-Private Sector Employment: Information Technology Occupations
This chapter and Chapters 3 and 5 demonstrated the following points. First, the demand for a highly skilled and educated workforce is growing faster in the U.S. than in Wyoming. Although the demand for labor over the next decade is greater in the U.S. than in Wyoming, Wyoming's need for skilled and educated labor is still projected to increase. Secondly, when comparing wages by educational level of workers in the destination states and the U.S. to those in Wyoming, it becomes clear that Wyoming finds it hard to compete in terms of attracting talented labor via wages. Lastly, the lower proportion of private sector employment opportunities in Wyoming offers less diversity for career advancement than in the U.S. and destination states.
To illustrate how Wyoming, destination states, and the nation use labor differently and create different opportunity structures, we focus on Information Technology (IT), or computer related occupations. The OES codes from 25102 to 25199 include 16 occupations in the computer scientist and related workers group. Table 6-4 lists these IT occupations, and Table 6-5 shows employment, wage, and sector of employment information for Wyoming, destination states, and the nation.
Wyoming is projected to add 23.5 percent more IT workers from 1996 to 2006. California is expected to add 71.4 percent; Colorado--93.1 percent; Montana--20.0 percent; Texas--56.2 percent; Utah--32.0 percent; and the U.S.--202.3 percent. With the exception of Montana, all other areas are projected to have a greater demand for IT workers from 1996 to 2006 than Wyoming.
Table 6-5 also provides evidence that Wyoming will have a hard time competing for IT workers, based on wages. All of the destination states and the nation pay higher average hourly wages for IT related occupations than Wyoming. Further, with the exception of Wyoming, the greater the projected percent change (demand) in employment for IT occupations, the higher the hourly rate of compensation (wages). For example, Colorado has the greatest projected demand for IT occupations and the highest average hourly wage, followed by California (second greatest demand and correspondingly the second highest wage).
Lastly, Table 6-5 demonstrates that Wyoming has less IT employment in the private sector than the other geographic areas. The economy in Wyoming offers fewer opportunities to move from public sector employment to private sector employment, where wages are generally higher for this highly technical occupational group.
In a recent report for Wyoming's Legislative Services Office (LSO)22--(see Appendix H), R&P demonstrated that of the IT professionals who left employment with Wyoming state government, 66.3 percent were not employed in Wyoming the first quarter following departure and quite likely left the state. Of those who remained in Wyoming, 50.0 percent were found working for private sector industry. Two quarters following departure from state government, those who remained in Wyoming had increased their earnings by 11.0 percent per quarter.
Figure 6-1, created from the data in Table 6-3b, shows the percent difference in private sector employment by education/experience level between Wyoming, destination states, and the U.S. For those occupations requiring education beyond work related experience, there are more opportunities for private sector employment in the destination states and the nation than in Wyoming.
As mentioned in the introduction to this chapter, the article from the Monthly Labor Review found that among white-collar workers, as duties and responsibilities increased, so did wages. It further stated that as duties and responsibilities increased, the private sector paid increasingly better wages. Lastly, the pay associated with jobs in the public sector lagged far behind that of the private sector for professional and administrative positions. Since the bulk of Wyoming's projected job growth occurs in few administrative and professional occupations requiring high educational levels, Wyoming industries--but the public sector, in particular--may find it increasingly more difficult and costly to attract and retain highly educated workers. The problem is compounded in Wyoming, particularly in the example of IT professionals, where the private sector (local competition) pays slightly higher wages than government. Moreover, all Wyoming firms, public or private, face significant competition for labor, particularly in the form of higher wages offered in destination states and the nation.
19 Michael Miller, "The Public-Private Debate: What Do the Data Show?," Monthly Labor Review 119, No. 5, 1996, pp. 18-29.
20 Department of Labor, Bureau of Labor Statistics, "National Industry-Occupation Employment Matrix: About the Numbers," 1998, (August 30, 2000).
21 Department of Labor, Bureau of Labor Statistics, "1998 Covered Employment and Wages CDROM1," Version 1, December 1999.
22 Wyoming Department of Employment, Research & Planning, "Analysis of State Government Attrition for Selected Occupations," Submitted to Wyoming Legislative Services Office, Program Evaluation Staff, pursuant to MOU with Department of Employment, Research & Planning, March 10, 2000. This report was used in preparation of Wyoming Legislative Service Office, Turnover and Retention in Four Occupations , May 2000, (August 30, 2000).
Last modified on August 10, 2001 by Valerie A. Davis.