First, some facts:
Here is data on average salaries for some professional occupations in a few western metro areas. This is from the Bureau of Labor Statistics' Occupational Employment Statistics Survey. You can get to this data here.
Accountants and Auditors
Phoenix $55,050
SF Bay $72,340
Denver $67,450
SLC $60,570
Computer Software Engineers, Systems Software
Phoenix $79,220
SF Bay $101,490
Denver $90,550
SLC $78,720
General and Operations Managers
Phoenix $99,060
SF Bay $123,850
Denver $107,880
SLC $95,140
Financial Managers
Phoenix $89,020
SF Bay $130,370
Denver $112,330
SLC $94,590
Compensation and Benefits Managers
Phoenix $68,550
SF Bay $106,820
Denver $92,480
SLC $93,660
You can see that for the most part, salaries are lower than SF and Denver. But higher, mostly, than Phoenix.
I think there are a few reasons for this:
(1) Composition of employers. I think there may be fewer corporate headquarters here than in Denver and SF, so on average managers here may not be as high on the corporate ladder.
(2) Our area is quite differentiated. What I mean by this is that people tend to have strong opinions one way or the other about Utah. For many of us, there is no place else we'd want to live. For individuals who value the strong LDS community or the very easy access to skiing, there is almost nowhere else on earth that offers comparable amenities.
For others, the cultural conservatism of our area can be off-putting. Think here of a non-religious, wine connoiseur who doesn't ski. For such individuals, our area might not be a good match.
What does this mean in terms of the labor market?
It means there is a set of workers that is going to live here even if wages are low. It is also means there's a substantial set of workers who wouldn't move here even if wages were much higher.
This means that local demographics matter a lot, or at least relatively more than in other parts of the country. If we have excess demand for managers, then wages will rise... but this increase in managerial wages won't draw workers from around the country to the same extent as it would in a less differentiated region. Similarly, if we have excess supply, wages will fall, but this might not push workers out of Utah to the same extent as it would in other locales.
Interesting, the demographic trends in Utah are quite different from those in other states, due to high fertility rates and the like. Pam Perlich is the U's expert on this stuff.... Maybe she'll guest blog for me someday on this. (Are you out there Pam?)
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2 comments:
Does this mean that wages here will be more reactive to changes in demand than they would be elsewhere? If raising the wage doesn't readily attract managers, do you keep raising the wage? Likewise, if reducing the wage doesn't drive people away, do you reduce it more?
So this makes sense, but also doesn't this equate into where firms choose to locate? In good times they might locate in the midwest where it's all flat and the same, so as to attract people from all over the midwest to fill positions at lower wages. While in tight times they might choose to locate in a unique area, such as Utah so as not to attract people from all over. But then again what firm grows in a tight time?
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