Wages vs Income – What’s the Difference?

<p>Significant differences in economic wealth exist among North Carolina&rsquo;s counties.&nbsp; No one will debate this.&nbsp; But the data that are selected and its interpretation are critical to identifying the differences in economic success.&nbsp; This article briefly discusses the value of data selection &ndash; specifically, the differences between wages and income.&nbsp; Understanding data is critical to identifying problems and potential solutions.</p>

Author: Jeff DeBellis

How Wage and Income Data Paint Differing Pictures of NC’s Economic Disparities

Wages and income are often mistaken as interchangeable metrics.  However, in economic terms, they measure very different aspects of the economy and can tell differing stories.  Below are two maps measuring NC’s county performance relative to the State in terms of Average Annual Wage and Median Household Income in 2014.  These were modeled after a map by economic development consultant, Ted Abernathy, during a presentation to the legislature in January. 

Some mistook Mr. Abernathy’s map of Average Annual Wage as an illustration of income inequality.  In fact, if you compare the Wage map (which measures where people work – measured by LEAD’s QCEW program) to the Income map (where people live – measured by the US Census), there is quite a difference.  Where there were just five counties above the State average in Average Annual Wage in 2014, there were 24 such counties for Median Household Income.

There are several reasons why this is true, including the differences between: average vs median; individuals vs households; and jobs vs people (where people may draw income from a combination of wages, benefits, investments, and other non-employment receipts).  But perhaps the largest reason for the disparity is the geography of work – or in other words, people commute out of their county for employment in large numbers, as a LEAD Feed article from last year highlighted.  The five counties with above state average wages accounted for 38% of all jobs in North Carolina (covered by unemployment insurance), while accounting for only 28% of its total population.

Stare at the two maps long enough and your eyes will water.  When your vision clears, you’ll recognize many interesting differences.  For instance, the average wage of jobs in many counties on the fringe of urban areas, such as Union, Chatham, and Gates, are below the NC average.  However since they’re in close proximity to areas of with high-paying jobs (Mecklenburg, Durham/Wake, Suffolk VA), commuting residents are able elevate the county income and produce higher medians.  You might also notice a few areas performing slightly better in the wage map than in the income map (such as Durham).  This may be due to an influx of commuters competing with local residents for local jobs.  In future LEAD Feed articles, we’ll dive deeper into the economic geography of jobs and income in attempt to find meaningful insights into this issue and North Carolina’s varied economic success.

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