Culpepper Compensation Surveys & Services   Home Home   |   Contact Us Contact Us   |   Site Map Site Map   |   Secure Subscriber Login Subscriber Login
  Culpepper eBulletin Newsletter
 

U.S. Pay Varies Significantly by Geographic Location
 February 2010

Geographic location is the dominant factor influencing market pay rates for most non-executive jobs. Our annual analysis of technology and life science industry wages in the U.S. demonstrates the importance of considering the impact of geography on compensation.

This year's geographic pay analysis of participating companies in Culpepper Compensation Surveys confirms that Silicon Valley and San Francisco in the California Bay Area continue to have the highest market wage levels in the United States. Pay rates in these technology-driven markets average 126.6% of the U.S. national average (Table 1).

Other high-paying locations include Boston, Denver/Boulder, New York City, Seattle, and Washington, DC. Pay levels in these markets run about 108% of the national average.

Pay Rates Can Vary Between Locales within Large Metro Areas
One common method of analyzing pay by geography is using Metropolitan Statistical Areas (MSAs) defined by the US Census Bureau. While MSAs may be popular for determining geographic pay differentials, MSAs were not designed for pay analysis and do not always provide precise geographic breakouts.

Our analysis of individual cities and large metropolitan areas across the U.S. reveals significant pay differences between specific locales within a number of large metro areas. Examples of some large metro areas where MSAs are inappropriate to use for geographical pay analysis include:

  • California Bay Area. In the California Bay Area, pay rates for East and North Bay average 109.7% of the national average, considerably lower than Silicon Valley and San Francisco.

  • New York. The MSA for the New York metro area includes several locales across the tri-state area of New York, New Jersey, and Connecticut. Our analysis indicates that pay rates for New York City and Newark, NJ typically run higher than other locales within commuting distance of New York City, such as Westchester County, Long Island, and Stamford/Greenwich/Norwalk.

  • Seattle. The MSA for the Seattle metropolitan area includes Seattle, Tacoma, and
    Bellevue, WA. Analysis of data from our participants reveals that pay levels in Tacoma are significantly less than Seattle and Bellevue. If you combine data from Tacoma with data from Seattle and Bellevue (as the MSA does), you will erroneously inflate market data for Tacoma and decrease market data for Seattle and Bellevue. Since pay rates in Tacoma are similar with Olympia, we combine them to create a Tacoma/Olympia geographic locale. Our Seattle locale includes the city of Seattle, Bellevue, and other communities east of Seattle within commuting distance that have similar pay rates.

Examples of large metro areas where MSAs are appropriate to use for geographical pay analysis include: Atlanta, Boston, Dallas/Fort Worth, Denver/Boulder, and Minneapolis/St. Paul. Since the pay levels are similar for the core city and combined adjacent cities and counties, the MSAs for each of these markets are suitable to use for geographic data cuts.

Geographic locales for large metro areas in Culpepper Compensation Surveys are carefully constructed to only combine local markets with similar pay rates.

Pay Rates Can Vary within Broad Geographic Regions
 One of the most common mistakes in pricing jobs by geography is using data cuts for states or broad geographic regions. The problem with using broad geographic regions is that they fail to capture differences between local markets within a state or region.

For example, if you use a broad geographic data cut for the Midwest region, you will artificially decrease wage data for the highest-paying locales in the region (e.g., Chicago, Minneapolis/St. Paul) and inflate wage data for lower-paying locales (e.g., Cincinnati, Cleveland/Akron, Detroit/Ann Arbor) and rural areas in the region.

Regional geographic area breakouts in Culpepper Compensation Surveys are carefully constructed to only combine geographic locales with similar pay rates.

Overview of Culpepper Geographic Data Cuts
 Culpepper Compensation Surveys provide three different types of U.S. geographic data cuts.

  1. Geographic Locales
         A geographic locale is a data cut designated for an individual city (e.g., Austin), broad metropolitan area (e.g., Los Angeles), or multiple cities that are close in geographic proximity (e.g., Dallas/Fort Worth) with similar pay rates. Geographic locales for the U.S. are based on the work location of individual employees by zip code from participating companies.

Example: Research Triangle locale is in the Southeast [3] geographic area and Pay Zone 3.

  1. Geographic Areas
    A geographic area is a data cut that amalgamates data from geographic locales within a common geographic region with similar pay rates.

    2. The number in brackets [x] appended to each geographic area represents the corresponding pay zone.

Example: Southeast [3] includes Atlanta and Research Triangle.

  1. Geographic Pay Zones
    Pay zones represent the highest paying regions (Pay Zone 1) through the lowest pay regions (Pay Zone 6). Similar to geographic areas, pay zones amalgamate data from multiple geographic locations and areas with similar pay rates. Geographic locales and areas assigned to a pay zone may or may not be contiguous. Pay Zones provide large geographic data cuts and are useful for organizations that want to accurately and intelligently create geographic pay differentials.

Example: Pay Zone 3 includes Atlanta, the Research Triangle, and other similar paying geographic locales outside of the Southeast, such as Los Angeles, Chicago, Philadelphia, and Austin. See Table 1 for a complete list of locales in each Pay Zone.

Each step up, from Geographic Locale to Geographic Area to Pay Zone, provides a larger grouping of geographic data with similar pay rates.

Culpepper Geographic Pay Index (CGPI)
The CGPI is an index that measures relative pay rates of different geographic locations. CGPI scores are based on the work location and cash compensation of individual employees collected from participating companies in Culpepper Compensation Surveys. Scores are used to allocate locales with similar pay rates to larger Geographic Areas and Pay Zones.
 

CGPI =

 Average Pay Rate of Work Location

x

100
U.S. National Average Pay Rate

U.S. Market Wage Levels by Geographic Pay Zone
 Table 1 provides average CGPI scores for six different Pay Zones in the United States. Each Pay Zone includes groupings of Geographic Locales and Areas with similar pay rates.

Table 1: U.S. Market Wage Levels by Geographic Pay Zone
Geographic Area [Pay Zone]  State: Geographic Locale

Pay Zone 1 (CGPI Range: 112.0%+, Average CGPI = 126.6% of National Average)
California Bay Area [1] CA: Bay Area: San Francisco
California Bay Area [1] CA: Bay Area: Silicon Valley

Pay Zone 2 (CGPI Range: 106.0 to 111.9%, Average = 107.8% of National Average)
California Bay Area [2] CA: Bay Area: East
California Bay Area [2] CA: Bay Area: North
Northeast/Mid-Atlantic [2] DC: Washington DC Metro (DC-MD-VA)
Northeast/Mid-Atlantic [2] MA: Boston
Northeast/Mid-Atlantic [2] NJ: Newark
Northeast/Mid-Atlantic [2] NY: New York City
Northwest [2] WA: Seattle
Southwest [2] CA: Santa Barbara/San Luis Obispo
Southwest [2] CO: Denver/Boulder
Non-Contiguous U.S. [2] AK: Anchorage
Non-Contiguous U.S. [2] AK: Fairbanks

Pay Zone 3 (CGPI Range: 100.0 to 105.9%, Average = 102.2% of National Average)
Midwest [3] IL: Chicago
Midwest [3] MN: Minneapolis/St. Paul
Midwest [3] WI: Milwaukee
Northeast/Mid-Atlantic [3] CT: Stamford/Greenwich/Norwalk
Northeast/Mid-Atlantic [3] DE: Wilmington
Northeast/Mid-Atlantic [3] MA: Springfield
Northeast/Mid-Atlantic [3] MA: Worcester
Northeast/Mid-Atlantic [3] MD: Baltimore
Northeast/Mid-Atlantic [3] NJ: Atlantic City
Northeast/Mid-Atlantic [3] NJ: Trenton
Northeast/Mid-Atlantic [3] NY: Albany
Northeast/Mid-Atlantic [3] NY: Long Island
Northeast/Mid-Atlantic [3] NY: Westchester
Northeast/Mid-Atlantic [3] PA: Philadelphia
Northeast/Mid-Atlantic [3] PA: State College
Northeast/Mid-Atlantic [3] RI: Newport
Northeast/Mid-Atlantic [3] VT: Burlington
Northwest [3] OR: Portland
Southeast [3] GA: Atlanta
Southeast [3] NC: Research Triangle
Southwest [3] CA: Los Angeles Metro
Southwest [3] CA: San Diego
Southwest [3] TX: Austin
Southwest [3] TX: Dallas/Fort Worth

US. National Average (CGPI = 100.0%)

Pay Zone 4 (CGPI Range: 95.0 to 99.9%, Average = 97.6% of National Average)
Midwest [4] IN: Indianapolis
Midwest [4] MI: Detroit/Ann Arbor
Midwest [4] MI: Lansing
Midwest [4] MO: Kansas City (KS & MO)
Midwest [4] OH: Cleveland/Akron
Midwest [4] WI: Madison
Northeast/Mid-Atlantic [4] CT: Bridgeport/New Haven
Northeast/Mid-Atlantic [4] CT: Hartford
Northeast/Mid-Atlantic [4] MA: New Bedford/Fall River
Northeast/Mid-Atlantic [4] MD: Frederick
Northeast/Mid-Atlantic [4] NH: Manchester/Concord
Northeast/Mid-Atlantic [4] PA: Harrisburg/Lebanon
Northeast/Mid-Atlantic [4] PA: Pittsburgh
Northeast/Mid-Atlantic [4] RI: Providence
Northeast/Mid-Atlantic [4] VA: Charlottesville
Northeast/Mid-Atlantic [4] VA: Richmond
Plains [4] MT: Metro Areas
Plains [4] NE: Omaha/Lincoln
Southeast [4] AL: Huntsville
Southeast [4] FL: Boca Raton/Palm Beach
Southeast [4] FL: Lakeland-Winter Haven
Southeast [4] FL: Melbourne/Titusville
Southeast [4] FL: Miami-Dade
Southeast [4] FL: Orlando
Southeast [4] FL: Port St. Lucie/Sebastian
Southeast [4] GA: Athens
Southeast [4] GA: Columbus
Southeast [4] NC: Wilmington
Southeast [4] SC: Charleston
Southwest [4] AZ: Flagstaff/Prescott
Southwest [4] CA: Oxnard/Ventura
Southwest [4] CA: Sacramento
Southwest [4] CA: Stockton/Modesto
Southwest [4] CO: Fort Collins
Southwest [4] UT: Salt Lake City
Non-Contiguous U.S. [4] HI: Hawaii & U.S. Pacific Islands

Pay Zone 5 (CGPI Range: 90.0 to 94.9%, Average = 92.2% of National Average)
Midwest [5] IA: Cedar Rapids
Midwest [5] IA: Des Moines
Midwest [5] IA: Quad Cities (IA & IL)
Midwest [5] IL: Champaign/Urbana
Midwest [5] IL: Peoria/Bloomington
Midwest [5] IL: Rockford
Midwest [5] IN: Anderson/Muncie
Midwest [5] IN: Evansville
Midwest [5] IN: South Bend
Midwest [5] MI: Grand Rapids
Midwest [5] MN: Rochester
Midwest [5] MN: St. Cloud
Midwest [5] MO: St. Louis
Midwest [5] OH: Canton
Midwest [5] OH: Cincinnati
Midwest [5] OH: Columbus
Midwest [5] OH: Dayton
Midwest [5] OH: Youngstown
Northeast/Mid-Atlantic [5] NY: Buffalo
Northeast/Mid-Atlantic [5] NY: Syracuse
Northeast/Mid-Atlantic [5] VA: Norfolk/Virginia Beach
Northeast/Mid-Atlantic [5] WV: Morgantown/Clarksburg
Northwest [5] WA: Bellingham/Mount Vernon
Northwest [5] WA: Spokane
Northwest [5] WA: Tacoma/Olympia
Northwest [5] WA: Yakima/Kennewick
Southeast [5] FL: Daytona Beach/Palm Coast
Southeast [5] FL: Fort Myers/Naples
Southeast [5] FL: Sarasota/Bradenton
Southeast [5] FL: Tampa/St. Petersburg
Southeast [5] GA: Macon
Southeast [5] GA: Savannah
Southeast [5] KY: Lexington
Southeast [5] KY: Louisville
Southeast [5] LA: New Orleans
Southeast [5] MS: Gulfport/Biloxi
Southeast [5] MS: Jackson
Southeast [5] NC: Asheville/Brevard
Southeast [5] NC: Charlotte
Southeast [5] SC: Columbia
Southeast [5] SC: Greenville/Spartanburg
Southeast [5] TN: Johnson City/Kingsport/Bristol
Southeast [5] TN: Knoxville
Southeast [5] TN: Memphis
Southeast [5] TN: Nashville
Southwest [5] AZ: Phoenix
Southwest [5] AZ: Tucson
Southwest [5] CA: Bakersfield
Southwest [5] CA: Fresno
Southwest [5] CO: Colorado Springs
Southwest [5] NM: Las Cruces/White Sands
Southwest [5] TX: Houston
Southwest [5] TX: San Antonio
Southwest [5] TX: Waco/Killeen

Pay Zone 6 (CGPI Range: < 90.0%, Average CGPI = 88.3% of National Average)
Midwest [6] IL: Springfield
Midwest [6] IN: Fort Wayne
Midwest [6] MI: Kalamazoo/Battle Creek
Midwest [6] MI: Saginaw/Midland
Midwest [6] MO: Columbia/Jefferson City
Midwest [6] MO: Springfield
Midwest [6] OH: Toledo
Midwest [6] WI: Eau Claire
Midwest [6] WI: Green Bay/Appleton
Northeast/Mid-Atlantic [6] MD: Hagerstown/Martinsburg
Northeast/Mid-Atlantic [6] ME: Portland
Northeast/Mid-Atlantic [6] NY: Newburgh/Kingston
Northeast/Mid-Atlantic [6] NY: Rochester
Northeast/Mid-Atlantic [6] PA: Allentown/Bethlehem
Northeast/Mid-Atlantic [6] PA: Lancaster
Northeast/Mid-Atlantic [6] PA: Reading
Northeast/Mid-Atlantic [6] PA: Scranton/Wilkes-Barre
Northeast/Mid-Atlantic [6] PA: York/Hanover/Gettysburg
Northeast/Mid-Atlantic [6] VA: Roanoke
Northeast/Mid-Atlantic [6] WV: Charleston
Northeast/Mid-Atlantic [6] WV: Huntington/Ashland
Northwest [6] ID: Boise
Northwest [6] ID: Idaho Falls/Pocatello
Northwest [6] OR: Eugene
Northwest [6] OR: Salem
Plains [6] KS: Topeka
Plains [6] KS: Wichita
Plains [6] ND: Fargo
Plains [6] OK: Oklahoma City
Plains [6] OK: Tulsa
Plains [6] SD: Sioux Falls
Plains [6] WY: Cheyenne
Southeast [6] AL: Birmingham
Southeast [6] AL: Mobile
Southeast [6] AL: Montgomery
Southeast [6] AR: Fayetteville/Bentonville
Southeast [6] AR: Little Rock
Southeast [6] FL: Fort Lauderdale/Broward
Southeast [6] FL: Gainesville/Ocala
Southeast [6] FL: Jacksonville
Southeast [6] FL: Pensacola
Southeast [6] FL: Tallahassee
Southeast [6] GA: Augusta
Southeast [6] GA: Gainesville
Southeast [6] LA: Baton Rouge
Southeast [6] LA: Lafayette
Southeast [6] LA: Shreveport
Southeast [6] NC: Fayetteville
Southeast [6] NC: Greensboro/Winston-Salem
Southeast [6] NC: Hickory/Morgantown
Southeast [6] NC: Rocky Mount/Greenville
Southeast [6] TN: Chattanooga
Southwest [6] CO: Pueblo
Southwest [6] NM: Albuquerque
Southwest [6] NV: Las Vegas
Southwest [6] NV: Reno
Southwest [6] TX: Beaumont
Southwest [6] TX: Corpus Christi
Southwest [6] TX: El Paso
Southwest [6] TX: Longview/Tyler
Southwest [6] TX: Lubbock
Southwest [6] TX: McAllen/Brownsville
Southwest [6] UT: Ogden
Southwest [6] UT: Provo
Non-Contiguous U.S. [6] PR: Puerto Rico & U.S. Virgin Islands

In closing, geographic location is the prevalent factor influencing market pay rates for most but not all non-executive jobs. Compensation for specific jobs in local markets can vary and can be impacted by a variety of other factors, including job level, company size, industry sector, talent availability, cost of living, and health of local economies.

In a future article, we will examine other factors that influence pay and how company size impacts  compensation levels for executives and higher level non-executive jobs more than geography.

Data source: The Culpepper Compensation Operations, Technology, and Life Science U.S. Surveys as of January 2010.

Copying. If you decide to copy portions of this article into your own publication or transmission, please cite your source by including the following: "Source: Culpepper Compensation Survey, January 2010, www.culpepper.com"

Geographic Data Cuts in Culpepper Compensation Surveys
Culpepper Compensation Surveys provide market rates for specific locations based on actual employee data from participating companies, allowing you to more accurately price your jobs.

Geographic Pay Differential Practices
 The following article provides summary results and analysis from a recent Culpepper Pay Practices Survey on geographic pay differentials. It includes best practices and policies for how companies use geographic pay differentials to design salary programs and manage differences in pay between different locations.
 
Share | |

Compensation Trends Newsletter

Stay informed of current market trends and practices for compensation programs. Subscribe to our FREE monthly Culpepper eBulletin e-mail newsletter.

 
 

Share |

Home | About Us | Surveys | Services | Trends | Privacy | Contact Us | Site Map

© 2012 Culpepper and Associates, Inc. All Rights Reserved.