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July 2003, Vol. 126, No.7
The effects of firm size on wages in Colorado: a case study
Information on firm size and an employer’s willingness to pay more for higher levels of education and experience are of value to jobseekers looking for their highest potential salary in today’s labor market. The Job Vacancy Surveys, conducted in Colorado by its Department of Labor and Employment, help jobseekers, labor market analysts, economists, and many others by providing information on the amount and types of jobs that are available and the qualifications that employers demand for those jobs. Data from the survey allow analysts to report the proportion of job vacancies and the average wages offered, with respect to vacancy characteristics, throughout the State. The survey also provides data on the wage range that employers are willing to pay the individual who is eventually hired.
Also of value to jobseekers is the knowledge that larger firms pay higher wages. Economists and sociologists have postulated many theories to explain this positive relationship since first reported in 1911.1
This article uses the abundant unique data set provided by Job Vacancy Surveys to explore the relationship between firm size, job vacancy needs and employers’ wage offers in the Colorado Front Range. Similar to other research, this study finds that Colorado’s large firms offered higher wages to fill vacancies than smaller firms with otherwise similar institutional characteristics and requiring the same levels of both education and experience.
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1 H. L. Moore, Laws of Wages: An Essay in Statistical Economics (New York, Augustus M. Kelley, 1911).
Related BLS programs
National Compensation Survey
Occupational Employment Statistics
How firm size and industry affect employee benefits.—Dec. 1990.
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