Earnings – Page 2 – Economic Thinking In Action

Earnings report for Science jobs

In this post, we look at some average earnings typical for particular occupations in the science field. The tabulation below is based on U.S. BLS survey data. The BLS job title groups are insightful, generally containing more specific job titles with similar knowledge, skills, and abilities (KSA), but can be more broad than a particular company’s job title listing.

Science STEM Salaries

Job Title	Average Salary
Physician Assistants	$ 108,837.21
Pharmacists	$ 96,866.57
Biological Scientists	$ 67,490.59
Registered Nurses	$ 62,350.85
Phlebotomists	$ 31,295.76

Source: BLS

Image source: http://fairmountinc.com/help-wanted-1-2-million-good-paying-jobs-available/

Our definition of STEM jobs: http://www.employstats.com/blog/2014/09/19/growing-national-interest-in-stem-fields-has-focused-our-research/

Return on education, student loan interest and repayment periods

Education remains the best investment around. One economic question that always comes up is: are student loans worth it? That is, should I take out a loan (if that is the only way I can attend college)?

The quick answer is usually yes for attendance at a reputable institution. So how do you calculate the return on education investment? Generally, the calculation subtracts the explicit cost of attendance (tuition, fees, books, and student loan costs both current and future) and the opportunity cost of attendance (that is the job you could have gotten) from the added income that the person will make over their working life due to the education investment.

See: https://studentaid.ed.gov/repay-loans/understand/plans

Student loans come in two forms: subsidized and unsubsidized. Subsidized loans are usually financial need based; unsubsidized loans are not. Both types of loans have requirements regarding school attendance (usually at least half time).

The type of loan also impacts the interest rate; higher the interest rate the lower the return on education.

Student loan repayment periods also vary. Nowadays, student loan time periods range from 10 to 25 years. There are programs that allow the repayment to increase over time, change with income, and ones that are fixed over time.

Generally, the shorter the repayment time period, the higher the return on the education investment. In short, less loan interest is paid on a shorter loan period.

The move by private employers to make salary information public

Some employers, both private and public, are moving towards making employee’s salaries public. “Making Pay Public” by Tamara Lytle , in HR Magazine, September 2014. discusses the recent trend of employers making employee’s salaries more open.

Some employers such as, Buffer, are going so far as to not only making their salaries public, but are also providing details on the decision process by which the employee’s salary was determined. For example, Buffer’s salary formula has set factors that take into account the employee’s job type, seniority, experience, location, and equity versus salary choice.

In the formula, engineers and designers have a base salary of $60.000 while content crafters have a base salary of $50,000. Employees in Austin receive a $12,000 salary kicker, while employees in San Franciso receive a $22,000 salary kicker. Buffer’s (and other’s) approach to salary is clearly a different approach from how some employers had pay discussions in the past.

A 1943 HR Manual from Disney:

The move by private employers to make salary information public

A 1943 HR Manual from Disney:

States raising their minimum wage in 2014

The following states raised their minimum wage in 2014:

Connecticut: Connecticut’s hourly minimum wage will increase incrementally to $10.10 over the next three years.

Delaware: Delaware’s minimum wage will increase to $8.25 an hour, effective June 1, 2015.

Hawaii: Hawaii’s minimum wage will increase to $10.10 per hour over the next four years.

Maryland: Maryland raised its minimum wage to $10.10 an hour by July 2018

Massachusetts: A new law will gradually raise the minimum wage in the state to $11 per hour by 2017,

Michigan: A new law will increase the state’s minimum hourly wage to $9.25 per hour by Jan. 1, 2018

Minnesota: The state’s minimum wage increased on Aug. 1, 2014, to $8 per hour for large employers (>$500k in gross sales). to $9.50 on Aug. 1, 2016. Beginning in 2018, the wage will be indexed to inflation to a maximum increase of 2.5 percent per year.

Rhode Island: The state’s minimum wage will increase to $9 per hour, effective Jan. 1, 2015.

Vermont: The state’s minimum wage will rise to $10.50 an hour by 2018. After 2018, annual cost-of-living increases of either 5 percent or if it is lower, a rate calculated by the federal Department of Labor annually that is tied to the consumer price index.

West Virginia: The state’s hourly minimum wage will increase to $8 on Jan. 1, 2015, and increase to $8.75 the following Jan. 1, 2016.

Washington, D.C.: The Minimum Wage Amendment Act of 2013 will increase the district’s minimum hourly wage in three steps to $11.50 by July 1, 2016

-See more at: http://www.shrm.org/legalissues/stateandlocalresources/pages/states-minimum-wage-2014.aspx#sthash.YFK7jjgC.dpuf

Significant new government compensation data reporting requirements on the way from the OFCCP

Seyfarth Shaw LLP and a number of other OFCCP watchers reported recently on Office of Federal Contract Compliance Programs (“OFCCP”) notice of proposed rulemaking (“NPRM”) that would require most Federal contractors and first-tier subcontractors to submit compensation data to the OFCCP through a web-based filing system on an annual basis. The stated goal of the new data is to provide the OFCCP better data to monitor and analyze the pay of men and women in the workforce.

According to Federal Register, Vol. 79, No. 153, August 8, 2014, the OFCCP’s new data requirement will require contractors and subcontractors to provide:

The total number of workers within a specific EEO-1 job category by race, ethnicity and sex;
Total W-2 wages for all workers in the EEO-1 job category by race, ethnicity and sex; and
Total hours worked by all employees in the EEO-1 job category by race, ethnicity and sex.

The Department of Labor estimates that the the total cost of the rule change is $50,009,885, $46,250,189 will be first year cost.

Moretti’s economic tale of two cites: where Microsoft is now and Albuquerque

In Moretti’s book, he provides a detail study of how innovation jobs can be economic driver and dictate the economic future of a town, city or region.

Moretti discusses where Microsoft (MSFT) is now , Seattle, and Albuquerque, NM. These two cities embody the natural experiment that he suggest shows the impact of innovation jobs. In short he shows how one town has grown and blossomed and the other has not.

He points to three factors that have lead to the drastic divergence.

1 Job Creation. The sheer number of innovation jobs created by Microsoft both directly and the tradition jobs that were created indirectly.

2. The MSFT millionaires. These millionairies changed the landscape of Seattle as they started their own companies in around the city (and the industry).

3. The Hubs. According to Moretti cities like Seattle have become ‘Hubs’ that attract other businesses. Many businesses find that the existence of other companies both in their industry (competitors) and related companies attracts other companies and makes it easier for them to do business

What’s the latest on the economic impact of outsourcing?

Outsourcing

According to Moretti, economic studies have generally found that outsourcing is a net good for the U.S. economy.

According to Moretti, many of the outsourced services are complements and not substitutes for the services that we use locally in the U.S.

In addition to citing several economic studies on the topic, Moretti uses the case study of Oracle. According to Moretti, In 2000 Oracle had 22,008 U.S. workers and 20,919 workers abroad. In 2014, as the company grew the number of jobs outsourced also grew.. By 2014, Oracle had 40,000 in the U.S. and 60,000 abroad.

According to Moretti, this was a net gain for the U.S. even though clearly outsourcing has increased for Oracle. Many of the U.S. jobs created by Oracle jobs are high paying jobs. Also, he further shoes that many of the jobs, like routine computer software programmers, were jobs that helped U.S. workers do their jobs better as opposed to replacing the work of native U.S. workers. Further the multiplier effect resulted in many support jobs being created in the U.S.

What is the innovation sector? Thoughts on Moretti’s book ‘The New Geography of Jobs’

Enrico Moretti’s book “‘The New Geography of Jobs” discusses how certain jobs, which he refers to innovation jobs, and where they are located are important factors for economic development. Using data and economic research as support, he provides numerous arguments that suggest that these types of jobs are big economic drivers and dictate the economic fate of many communities.

So what are innovation jobs? Moretti defines innovation jobs as jobs that make intensive use of human capital and human ingenuity. These jobs includes the obvious like high tech software jobs but also less obvious like jobs in the movie industry that make use of high tech and personal creativity.

Throughout the book Moretti argues that the typical innovation job is worth more substantially more than traditional jobs. That is one reason why he believes we should not be concerned about the loss in the traditional types of jobs.

Accounting for kids and marriage in the calculation of a person’s worklife expectancy

Abstract (From Millimet et. al)

Measuring an individual’s human capital at a point in time as the present actuarial value of expected net lifetime earnings has a lengthy history. Calculating such measures requires accurate estimates of worklife expectancy. Here, worklife estimates for men and women in the USA categorized by educational attainment, race, marital status, parental status and current labour force status are presented. Race has a much larger impact on the worklife expectancy of men than women. Education is associated with larger worklife differentials for women. The association between marriage and worklife expectancy is significant, but of opposite sign, for men and women: married women (men) have a lower (higher) worklife expectancy than single women (men). Parenthood is associated with a reduction in the worklife expectancy of women; the association is smaller and varies from positive for some education/marital status groups to negative for others for men.

From:

DETAILED ESTIMATION OF WORKLIFE EXPECTANCY FOR THE MEASUREMENT OF HUMAN CAPITAL: ACCOUNTING FOR MARRIAGE AND CHILDREN
Daniel L. Millimet
Southern Methodist University
Michael Nieswiadomy
University of North Texas
Daniel Slottje
Southern Methodist University: