What Occupations have the Biggest Wage Gaps?

<p>It is common to see averages and medians used to analyze wages and compare them between occupations, but those measures don&rsquo;t tell the whole story in understanding what employees are paid. What about the range of wages among employees who share an occupation? Looking at OES data, we see that workers in some occupational groups are paid within a wide range of wages, while employees in other occupations tend to make relatively similar wages.</p>

Author: Steven Pennington

Averages and medians are often used to describe and compare the wages paid for holding certain occupations and as a technique to evaluate job quality. But averages and medians don’t tell the whole story. Some occupations offer a wide range of wages to workers, while others offer a far narrower range.

The graph below uses Occupational Employment Statistics data to illustrate the range from the 10th percentile wage (10% of employees earn less than this wage) to the 90th percentile wage (90% of employees earn less than this wage) for each occupational group in North Carolina. For instance, the graph shows that 10% of employees in Management occupations earn less than $55,000 per year, while 10% earn more than $187,000. In addition, each occupational group’s median wage is plotted with a green dot within each range.

The graph shows that occupations with higher median wages tend to have higher wage variation within the occupation. Legal and Management occupations have the largest wages ranges, while bottom-paid Food Preparation occupations have the smallest range.

The position of the median wage also demonstrates skewness within each occupation. For instance, Legal and Sales occupations are among the most skewed upward by relatively few very high wage earners. The 90th percentile wage for Legal occupations (which includes employees from lawyers to paralegals) is 228% greater than the median wage. This means that employees at the top of the wage distribution are being paid far better than the median. The same is true in Sale occupations, in which the 90th percentile wage is 211% greater than the median.

In comparison, top earners within Community & Social Services occupations only earn 47% greater wages than the median.

In some instances, these wide ranges can be explained by examining the very different occupations that make up each occupational group. Unfortunately, that method doesn’t always provide much insight into why these differences in pay show up in some occupational groups and not in others. In many cases, if you look at the wage ranges for individual occupations, these large ranges persist.

The wage paid to an individual employee is dependent on a variety of factors, including education, skills, and experience (not to mention things over which individuals have less control, like gender dynamics). For job seekers hoping to command the highest wages in their occupations, it will be critically important to understand both the economic returns to education and the value of in-demand skills.

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