State Patterns of Occupational Earnings: Implications for Long-Term Growth

This article focuses on the role of real and money wages in a state’s growth (macro) and location (micro) prospects. Data from the Bureau of Labor Statistics Occupational Employment Statistics (OES) survey for 2000 were used first to indirectly estimate state cost-of-living (COL) indices. These COL indices are the major contribution of this article. The methodology employed, in combination with the current 6-month reporting cycle for the OES, should eventually allow the computation of accurate inflation indices for states and regions. By applying these COL indices to OES-reported money wages by occupation, estimates of real wages are derived. Likely growth scenarios, both in terms of total employment and for certain key occupations, are investigated under two assumptions: first, that workers positively respond, by entry and migration, to those areas having above-average real wages, and second, that capital flows respond to below-average money wages.