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Technical information: (202) 691-6567 USDL 02-540 http://www.bls.gov/cew/ For release: 10:00 A.M. EDT Media contact: 691-5902 Tuesday, September 24, 2002 AVERAGE ANNUAL PAY BY STATE AND INDUSTRY, 2001 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 - States 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. Industry 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" (http://www.bls.gov/opub/mlr/2001/12/ art2full.pdf) and "A first look at employment and wages using NAICS" (http://www.bls.gov/opub/mlr/2001/12/art3full.pdf) 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 years. 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 http://www.bls.gov/bls/NAICS.htm and the Bureau of the Census Web page at http://www.census.gov/epcd/www/naics.html. The NAICS 2002 manual is available from the National Technical Information Service (NTIS) Web page at http://www.ntis.gov/. ---------------------------------------------------------------------- | 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 http://www.bls.gov/cew/ in mid-October. | -----------------------------------------------------------------------