How are we doing?
In 2016 the wage distribution for the Tucson Metropolitan Statistical Area (MSA) fell short at every percentile when compared to the state of Arizona and the U.S. For example, low-wage earners (those in the 10th percentile) in Tucson earned $18,740, just less than the 10th percentile wage for Arizona ($18,940) or the U.S ($19,290). When comparing median wages, those in Tucson earned 4.2% less than Arizonans and 8.3% less than the nation. In the U.S., 90% of jobs paid less than $94,540 per year, compared to $81,780 in Tucson, representing a 13.5% difference. Thus, high-wage earners in Tucson earned substantially less than those in the U.S. High-wage earners (those in the 90th percentile) in Tucson made 4.4 times more than low-wage earners (those in the 10th percentile). Since 2001 the difference between high-income and low-income earners has widened by 7.3% for Tucson, 4.7% for Arizona, and 8.9% for the nation.
Why is it important?
Wages, compensation received from working, are the primary source of income for most individuals. Higher wages are often associated with increased economic opportunities and ability to acquire goods and services. Individuals in a region may earn different wages for a variety of reasons, including differences in education, occupation, industry, sex, age, race, and other personal and regional characteristics. The gap between high-wage and low-wage earners gives us an indication of the wage inequality within a region. This matters because regions with high inequality may be distributing the benefits of economic growth in a narrow way.
How do we compare?
The wage ratio between the 90th (high income earners) and 10th (low income earners) percentile of the wage distribution reflects a region’s wage inequality. This measure is referred to as the 90/10 wage ratio. The smaller the ratio, the less wage inequality a region displays. In 2016 the 90/10 ratio for the Tucson MSA was 4.4 while the U.S. had a 90/10 ratio of 4.9. Wage earners at the 90th percentile earned $81,780, which is 4.4 times more than workers at the 10th percentile. That difference was higher for the U.S. at 4.9, reflecting a wage of $94,540 for those in the 90th percentile and $19,290 for those in the 10th percentile.
The Tucson Metropolitan Statistical Area (MSA) ranked third in wage inequality when compared to other MSAs around the West. Tucson’s 90/10 ratio was 4.4, meaning that wage earners in the 90th percentile earned 4.4 times more than wage earners in the 10th percentile. Only El Paso and Las Vegas had lower 90/10 ratios at 4.2 and 4.3 respectively. Denver and Austin had the largest wage inequalities with 90/10 ratios over 5.0.
What are the key trends?
Wage disparities increased between 2001 and 2016 for the Tucson MSA, the state of Arizona, and the U.S. In 2016 the U.S. had a 90/10 ratio of 4.9, an increase of 8.9% in 15 years. Tucson and Arizona did not post the same steady increase in the wage gap as the nation. In 2016 the 90/10 ratio for Tucson was 4.4, down from a high of 4.6 in 2006. The increase in the wage gap between 2001 and 2016 for Tucson was 7.3%.
How is it measured?
The U.S. Bureau of Labor Statistics collects survey data on wages by occupation and industry and then reports this data annually as their Occupational Employment Statistics (OES). The OES data includes detailed employment-and-wage data for over 800 occupations and industries. Wages are compensation received from working and do not include fringe benefits or other sources of income such as interest, bonuses, dividends and rents. The 10th percentile represents the wage at which 10 percent of workers earn less. Likewise, the 90th percentile reflects the wage at which 90 percent of workers earn less. Median refers to the midpoint of the income distribution, with half of the wage earners receiving wages above the midpoint and half receiving wages below.