Pay Premiums among Major Industry Groups in New York City
Boily, Lisa, Monthly Labor Review
Although workers in New York City continue to earn substantially more on average than workers in lower-cost areas, most of the rise in New York City's pay premium is attributable to growth in average pay in the financial activities industries; despite a 2007-2009 decline, the financial activities pay premium nearly doubled during the 1990-2009period
New York City's pay premium--the percent by which people who work in the combined five counties of New York City were paid above the national average--has risen substantially since 1990. (1) Employees in New York City earned an average of $34,381 in 1990, which was 46 percent above the national average, and earned $73,845 in 2009, 62 percent above the national average. (2) After adjustment for inflation, average annual earnings of New Yorkers rose 26 percent over the 19-year period, while the earnings of U.S. workers rose 18 percent. In the City's financial activities industries, the growth in pay premiums was even more pronounced, rising from 83 percent in 1990 to 163 percent in 2009, with average annual pay among employees in New York financial firms rising from $52,227 to $183,925 over the same period. (See table 1.)
Given the City's widely acknowledged high cost of living, it is no surprise that, on average, people who work in New York City earned more than those in the Nation as a whole, nor is it any surprise that the City's financial activities employees earned significantly more than the national average for employees in the financial activities supersector. What is less clear is how the vast majority of people--those who worked outside the financial activities supersector, which is defined by the Bureau of Labor Statistics (BLS) as the finance and insurance sector plus the real estate and rental and leasing sector--shared in the overall pay premium growth. This report uses data from the BLS Quarterly Census of Employment and Wages (QCEW) (3) to shed light on how New York City's pay premium growth affected the pay of employees in both financial activities and non-financial activities. QCEW wage data are particularly well-suited for examining this relationship because they include cash payments, such as bonuses and profit distributions, as well as base wages and salaries. This comprehensive picture of total cash compensation is important when analyzing pay relationships in the financial activities supersector, where bonuses can represent a significant percentage of overall pay.
Because the QCEW produces county-level data, New York City data were generated by combining information for the city's component counties: Bronx, Kings (Brooklyn), New York (Manhattan), Queens, and Richmond (Staten Island). This report provides a close examination of employment and wages in New York City's five largest supersectors. (4) For each of the supersectors examined, employment and wages in the City are compared with employment and wages in the supersector for the Nation as a whole. The resulting pay premium, therefore, is the New York City premium paid compared to the wages in the same supersector nationally.
The analysis begins with a focus on financial activities employment in the private sector. Then employment for all industries (both private and public sector) excluding the financial activities supersector is examined. (See table 1.) These non-financial industries accounted for 88 percent of New York City employment in 2009. Non-financial-activities employment is further subdivided into the following private-sector industries: education and health services; professional and business services; and trade, transportation, and utilities. Finally, the government supersector is examined. A brief discussion of real wage growth--that is, wages deflated by the Consumer Price Index--for both financial and non-financial industries over the 19-year period concludes the analysis.
Pay premiums by supersector
Financial activities. Throughout the period studied, the financial activities supersector was the single largest contributor to New York City's wage base. …