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Economic News Release
QCEW QCEW Program Links

Average Annual Pay By State and Industry

Technical information:  (202) 691-6567       USDL 02-540
                                             For release: 10:00 A.M. EDT
Media contact:               691-5902        Tuesday, September 24, 2002


   The average annual pay of all workers covered by state and federal
unemployment insurance (UI) programs rose by 2.5 percent to $36,214 in
2001, according to preliminary data released today by the Bureau of Labor
Statistics of the U.S. Department of Labor.  This compares with a
5.9 percent rise in 2000.  The annual pay of private industry workers,
comprising 84.3 percent of the nation's employment, grew by 2.3 percent in
2001, while pay for government workers rose by 3.6 percent.  In 2000, the
increase in pay for private sector workers was 6.3 percent and for government
workers, 4.1 percent.

   This release provides the first annual data that use the 2002 version
of the North American Industry Classification System (NAICS) as the basis
for the assignment and tabulation of economic data by industry.  The NAICS
structure is significantly different than that of the 1987 Standard
Industrial Classification (SIC), system which had been used for industry
classification purposes until this year.  This difference results in NAICS-
based data that are not comparable with historical SIC-based data.  For
more information, see the Industry and the Change in Industry Classification
Systems sections of this release.

   Pay growth for U.S. workers in 2001, at 2.5 percent, was the third lowest
in the 1991-2001 period.  As the economy slowed in 2001, pay growth dropped
below 3 percent for the first time since 1994.  Average annual pay for workers
grew by 47.3 percent from 1991 to 2001, a gain of $11,636.  The attached
tables contain pay data for the nation, each of the 50 states, the District of
Columbia, Puerto Rico, and the Virgin Islands.  (Data for Puerto Rico and the
Virgin Islands are not included in the national averages.)

   Annual pay data are compiled from reports submitted by employers subject
to state and federal unemployment insurance (UI) laws, covering 129.7
million full- and part-time workers.  Average annual pay is computed by
dividing total annual payrolls of employees covered by UI programs by the
average monthly number of these employees.  (See Technical Note.)  Pay
differences among states reflect the varying composition of employment by
occupation, industry, and hours of work, as well as other factors.  Pay
differences among industries are similarly affected.  For example, average
annual pay levels in retail trade industries are reduced by the relatively
large share of part-time workers.  Correspondingly, pay levels in construc-
tion industries reflect the prevalence of part-year employment due to weather
and seasonal factors.  Over-the-year pay changes may reflect shifts in the
composition of employment, as well as changes in the level of average pay.

   |        Quarterly Release of Covered Employment and Wages Data         |
   |                                                                       |
   |    BLS will begin the quarterly release of employment and wages data  |
   | at the state total level and at the national industry subsector level,|
   | beginning with the release of data for the first quarter of 2002 in   |
   | October 2002.                                                         |

                                  - 2 -


   Among the states, Connecticut had the highest average pay level
($46,963) in 2001, followed by New York ($46,664), Massachusetts ($44,976),
New Jersey ($44,285), and California ($41,358).  (See table 2.)  The 2001
pay levels of these five highest-ranking states, accounting for 25 percent
of the nation's employment, ranged from 14 to 30 percent higher than the
U.S. average.  Occupying the remaining top 10 pay positions for states
were, in order of 2001 pay levels, Illinois, Delaware, Maryland, Colorado,
and Washington.  Michigan, Virginia, and Minnesota also had pay levels
above the U.S. average.  Among the jurisdictions covered in this release,
the District of Columbia had the highest annual average pay level ($56,024).

   Among the states with annual pay below the U.S. average, Montana posted
the lowest average pay ($25,194) in 2001.  The next lowest pay levels were
in South Dakota ($25,600), North Dakota ($25,707), Mississippi ($25,919),
and Arkansas ($27,258).  These five states continued to have the lowest
average wages in the nation, as they have since 1988.  The 2001 average
annual pay figures for these states, which account for only 3 percent of
the nation's workers, were 25 to 30 percent below the national average.
Average annual pay levels for 37 states were below the U.S. average in 2001;
combined, workers in these states accounted for 56 percent of the nation's
covered employment.

   Overall, pay gains declined sharply in 2001 compared with the previous
year.  Annual pay grew by at least 4 percent in 30 states and the District
of Columbia in 2000, whereas only 11 states and the District of Columbia
reached this growth rate in 2001.  While 12 states posted pay increases of
6 percent or higher in 2000, no states attained this level of growth in 2001.
Only seven states and the District of Columbia experienced higher annual pay
growth in 2001 than was experienced in 2000.  The seven states were Alabama,
Delaware, Kentucky, Louisiana, Maine, North Dakota, and West Virginia.  In
contrast, 41 states experienced higher annual pay growth rates in 2000
compared with 1999 growth rates.

   On the high end of the growth scale in 2001, the District of Columbia and
Delaware experienced the largest percentage increases in pay from 2000 to
2001 (5.8 and 5.2 percent, respectively).  (See table 3.)  The next highest
pay increase was registered in Maryland (5.1 percent), followed by Vermont
(4.6 percent) and Louisiana (4.5 percent).  No state reported a decline in
average annual pay in 2001.  Idaho registered the smallest increase in pay
(0.2 percent).  Following Idaho were California (0.4 percent), Washington and
Michigan (1.0 percent each), and Oregon (1.3 percent).  The 2001 growth rates
for all of these states were lower than their pay growth in 2000.  California
experienced the largest slowdown in pay growth among all the states, moving
from a 9.6 percent increase in 2000 to a 0.4 percent increase in 2001.


   Industrial classification has changed significantly with the introduction
of the North American Industry Classification System (NAICS).  While there
were 9 major industry divisions in the private sector under the Standard
Industrial Classification (SIC) system, there are 19 industrial sectors under
NAICS.  The NAICS-based industry data for 2001 are not comparable to the
SIC-based data for earlier years.  For example, retail trade accounted for
21.2 percent of private sector employment under the SIC in 2000, whereas
retail trade under NAICS accounts for only 13.9 percent of 2001 private

                                  - 3 -

sector employment.  This large shift is not economic in nature, but is
caused by the substantially different industrial classification principles
found in the NAICS system.  (See the following section on the change in
industry classification systems.)  Another example can be drawn from the
services industry.  Under the SIC system, the services division accounted
for over 34 percent of private sector employment.  This group no longer
exists under NAICS.  Establishments formerly assigned to the SIC services
division have been distributed across most of the sectors in the service-
providing domain.  For more information, see "Implementing the North American
Industry Classification System at BLS" (
art2full.pdf) and "A first look at employment and wages using NAICS"
( in the December 2001 issue
of the Monthly Labor Review.

   Average annual pay levels for the nation varied widely by industry.
(See table 4.)  The highest average annual pay for 2001 was in the
management of companies and enterprises industry--$69,069.  Workers within
management of companies and enterprises received pay that was 91 percent
greater than the national average for all private sector workers in 2001.
The next highest pay level was in utilities ($65,582), which was 81 percent
higher than the average pay for all private industry workers.  The lowest
pay level in 2001 occurred in accommodation and food services ($13,669).
The pay level of workers in this industry was 62 percent below the national
average for all private industry workers.

   The largest over-the-year percentage pay increase in the private sector was
registered in the administrative and waste services industry (5.9 percent).
The next largest increase was in finance and insurance (4.9 percent), followed
by health care and social assistance (4.6 percent) and educational services
and construction (4.1 percent each).  Combined, these five sectors account
for 32 percent of private industry employment.  The smallest pay gain among
the 19 major private industry sectors occurred in professional and technical
services (1.2 percent).  Two industries that experienced negative pay growth
were information (-1.7 percent) and management of companies and enterprises
(-0.6 percent).  The information industry is dominated by the telecommunica-
tions and information services groups.

   The average annual pay level for the public sector, which includes
federal, state, and local government establishments, was $36,510 in 2001,
1.0 percent higher than the $36,159 average pay level for the private
sector.  With the exception of the year 2000, private pay has been below
government pay since BLS first published these figures in 1982.  Public
sector pay was 0.2 percent lower than private sector pay in 2000, 2 percent
higher in 1999, 4 percent higher in 1998, and 10 percent higher in 1994.
Pay differentials between the public and private sectors reflect many
variables, including work activity and occupational structure.

   This is the first year since 1994 that average annual pay gains in the
government sector have outpaced those in the private sector.  In 2001,
average annual pay in the public sector grew 3.6 percent compared with
2.3 percent pay growth in the private sector.  Since 1996, pay has grown by
18 percent in the public sector, 9 percentage points below the 27 percent
growth rate in the private sector.  Over the past 10 years, average annual
pay for government employees rose by 37 percent, while pay for private
industry workers increased by 50 percent.

                                  - 4 -

Change in Industry Classification Systems

   Beginning with the release of data for 2001, publications presenting data
from the Covered Employment and Wages program use the 2002 version of the
North American Industry Classification System (NAICS) as the basis for the
assignment and tabulation of economic data by industry.  NAICS is the product
of a cooperative effort on the part of the statistical agencies of the United
States, Canada, and Mexico.  Due to differences in NAICS and SIC structures,
industry data for 2001 are not comparable to the SIC-based data for earlier

   NAICS uses a production-oriented approach to categorize economic units.
Units with similar production processes are classified in the same industry.
NAICS focuses on how products and services are created, as opposed to the SIC
focus on what is produced.  This approach yields significantly different
industry groupings than those produced by the SIC approach.

   Data users will be able to work with new NAICS industrial groupings that
better reflect the workings of the U.S. economy.  For example, a new industry
sector called Information brings together units which turn information into a
commodity with units which distribute that commodity.  Information's major
components are publishing, broadcasting, telecommunications, information
services, and data processing.  Under the SIC system, these units were spread
across the manufacturing, communications, business services, and amusement
services groups.  Another new sector of interest is Professional and technical
services.  This sector is comprised of establishments engaged in activities
where human capital is the major input.

   Users interested in more information about NAICS can access the Bureau
of Labor Statistics Web page at and the
Bureau of the Census Web page at
The NAICS 2002 manual is available from the National Technical Information
Service (NTIS) Web page at

 |    Average annual pay for 2001 and other data from the Covered       |
 |  Employment and Wages (CEW) program will be available on the BLS Web |
 |  site at in mid-October.                     |

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