Why the same job pays differently by metro

Open any occupation page and the table of metropolitan areas will show medians that differ by a third or more for the same job. The differences are real, they are measured by the same survey, and they have several causes that the survey itself cannot separate.

What a metro area is

OEWS publishes estimates for metropolitan statistical areas as defined by the Office of Management and Budget: a core urban county plus the surrounding counties tied to it by commuting. Some areas cross state lines; New York’s includes counties in New Jersey, and Washington’s includes parts of Maryland, Virginia and West Virginia. The rest of each state, outside any metro area, is published as one or more nonmetropolitan areas. Definitions are revised after each census, so an area’s boundary in one release may not match an earlier one.

Reasons wages differ

Industry mix. The same occupation is paid differently by different industries, and metros differ in which industries they host. Software developers in a metro dominated by finance or by defense contractors face a different pay structure from those in a metro of small software firms. OEWS publishes industry wages nationally, not by metro, so this effect is visible only indirectly.

Local labor market. Where an occupation is scarce relative to demand, employers bid more. The location quotient on each metro page, explained in employment per 1,000 and location quotient, shows how concentrated the occupation is, which is one side of that balance.

Price levels. Employers in expensive metros must pay more to attract workers who face higher housing costs. Nominal wages reflect that, which is why coastal metros lead most occupation tables. This is the part most readers want adjusted for, and the part this site deliberately does not adjust.

Legal floors. For occupations near the bottom of the distribution, the state minimum wage and local ordinances set the 10th percentile almost directly. A food preparation worker’s median in Seattle and in Houston differ in large part because the legal floors differ.

Composition. A metro whose workers in an occupation are older, more specialized or more likely to be full-time will show higher percentiles even if the pay scale for identical workers is the same. OEWS collects none of these characteristics.

What this site does not do

It does not divide a wage by a cost-of-living index. There is no federal cost-of-living index by metro area: the Consumer Price Index measures change in prices over time for a handful of large areas, not the level of prices in one place relative to another, and BLS says so on its regional resources page. The Bureau of Economic Analysis publishes regional price parities by state and metro, which are a measure of price levels, but applying them to a wage produces a figure that is neither the wage nor anything an employer pays, and small changes in method move the ranking. The site shows the published nominal wage and names the limitation.

If you want to compare a wage with living costs for a specific budget, a calculator that takes your own figures is the right tool, and the sister site FastCalc has paycheck and take-home calculators. This site publishes the data they use and nothing that computes a personal result.

Reading a metro table well

Compare the same percentile across metros, not a median in one with a mean in another. Look at the spread, not just the median: a metro with a high median and a low 10th percentile pays its experienced workers well and its newest workers poorly. Check employment; a metro with 60 workers in an occupation has a noisy estimate. And read the nonmetropolitan rows, which are often lower than every metro in the state and describe where a large share of the state’s workers actually are.

The state pages list every metro in the state with its all-occupations median, which is the quickest way to see how much of a metro’s lead in one occupation is simply that metro paying everyone more.