Income Is More Than Just a Product of Location

 

Connecting state and local government leaders

A new tool shows state to state, county to county, and city to city differences but offers an even more comprehensive picture.

Income varies by location in the U.S., but occupation, cost of living, taxes and non-wage amenities also affect labor market outcomes, according to a new report from Brookings’ The Hamilton Project.

So the project—aimed at growing the economy to benefit more Americans—released an interactive tool to help workers account for these factors when making education and career decisions.

Amenities like good weather, clean air, public safety and accessibility all have value, but not all workers will stomach a higher cost of living or lower earnings to take advantage.

“Overall, less-educated workers are less willing to pay for amenities while more-educated workers are willing to pay particularly high premiums for amenities such as restaurants and clean air, for example,” according to the report.

That’s likely because education accounts, in large part, for earnings differences.

Median earnings for full-time workers ages 25-64 in the U.S. are $41,000, but those with less than a high school education have median earnings of $23,000.

The Hamilton Project also found median earnings ranged from $15,000 to $182,000 across 320 occupations.

Sebring, Florida saw the lowest median earning among metro areas at $26,000, while the San José-Sunnyvale-Santa Clara, California area boasted the highest at $65,000. Workers in the top 30 locations earned 37 percent more than those in the 30 worst locations.

Age, race/ethnicity and sex also accounted for 20 percent of the variation across workers, according to the report.

When it comes to occupational income, not all locations are equal either. Primary school teachers in the Riverside-San Bernardino-Ontario, California metro area earn a median income of $66,900—$27,200 more than the regional median—while those in Wichita, Kansas are on par with the regional median.

A common fallacy: A high cost of living isn’t necessarily the result of high wages, per Brookings’ analysis.

Cost of living in the San Francisco metro area is not high simply because it is dense or because residents earn a high wage, however. Deliberate policy choices such as land-use restrictions have contributed to sharply rising rents and home prices, limiting the number of people who can access the economic opportunities in high-wage cities. This in turn limits U.S. economic growth and allows a divergence between incomes in different places.

High tax states offset the cost by spending the revenue on public goods valued by their residents.

If The Hamilton Project’s analysis proves anything, it’s that labor market outcomes vary widely across the U.S. and understanding the interplay between contributing factors gives workers a leg up.

Dave Nyczepir is a News Editor at Government Executive’s Route Fifty and is based in Washington, D.C.

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