General Information: (312) 353-1880      For Immediate Release:
Media Contact: Paul LaPorte              Wednesday, December 19, 2007
              (312) 353-1138
http://www.bls.gov/ro5


                 OCCUPATIONAL PAY RELATIVES FOR
               METROPOLITAN AREAS IN INDIANA, 2006
                                
     The pay relative in 2006 averaged across all occupations in
the Indianapolis, Ind. Metropolitan Statistical Area (MSA) was
97, meaning that pay on average was 3 percent below the national
average.  In the Elkhart-Goshen, Ind. and Bloomington, Ind. MSAs,
the pay relatives were 96 and 90, meaning workers earned on
average 4 and 10 percent less than the national average,
respectively, according to the U.S. Department of Labor's Bureau
of Labor Statistics (BLS).  Regional Commissioner Jay A. Mousa
noted that the pay relatives for the three metropolitan areas
surveyed in Indiana were all significantly lower than the
national average. (See chart A and table A.)

Chart A.  Pay relatives for all occupations in metropolitan areas
in Indiana, area-to-nation comparisons, National Compensation
Survey, June 2006 (U.S. = 100)




     BLS produces occupational pay relatives to facilitate
comparisons of occupational pay between metropolitan areas and
the United States as a whole.  Using data from the National
Compensation Survey (NCS), pay relatives-a means of assessing
relative pay differences-- have been prepared for 2006 for each
of the 9 major occupational groups with 78 Metropolitan
Statistical Areas, as well as averaged across all occupations for
each area.

Area-to-Nation Comparisons

     In Indianapolis, the production occupational group had a pay
relative that was significantly higher than the national average.
In contrast, two occupational groups--management, business, and
financial and construction and extraction--posted pay relatives
that were significantly lower than the U.S. average.  The
remaining six occupational groups posted pay relatives that were
not significantly different from that of the nation.

Table A.  Pay relatives for major occupational groups in metropolitan areas in Indiana, area-to-nation
comparisons, National Compensation Survey, June 2006
-----------------------------------------------------------------------------------------------------
                    |               |   Management,   |               |              | 
 Metropolitan Area  |     All       |  business, and  | Professional  |              |  Sales and 
                    |  occupations  |   financial     | and related   |   Service    |   related
-----------------------------------------------------------------------------------------------------
  United States           100	           100	            100	            100            100
Bloomington, Ind.	   90*	            89*	             97*	     90*	    78*
Elkhart-Goshen, Ind.	   96*	            96*	             94*	     96*	    95*
Indianapolis, Ind.	   97*	            82*	             97	             97	            95
-----------------------------------------------------------------------------------------------------
                    |  Office and   |                 | Installation, |  	     | Transportation 
 Metropolitan Area  |administrative |  Construction   | maintenance,  |              |  and material 
                    |   support     | and extraction  |  and repair   | Production   |     moving
-----------------------------------------------------------------------------------------------------
  United States       	  100	           100	            100	            100	           100
Bloomington, Ind.	   88*	            78*	             85*	     97*	   104*
Elkhart-Goshen, Ind.	   92*	           109*	             92*	     98	           101
Indianapolis, Ind.	   98	            93*	             95	            108*	    99
-----------------------------------------------------------------------------------------------------
*The pay relative for this area is significantly different from the national average of all areas at 
 the ten percent level of significance.  For additional details, see the Technical Note.

     In the Elkhart-Goshen area, the only occupational group to
post a significantly higher pay relative was construction and
extraction.  Six of the nine occupational groups had pay
relatives that were significantly below the national average,
including office and administrative support and installation,
maintenance and repair.  The remaining two occupational groups
posted pay relatives that were not significantly different from
the national average.

     Workers in the Bloomington area had significantly different
pay relatives than the national average in all nine occupational
groups.  Transportation and material moving was the only
occupational group to post a significantly higher pay relative.
Eight of the nine occupational groups had pay relatives that were
significantly lower than that for the nation, including sales and
related and construction and extraction.
     
Area-to-Area Comparisons
     
     Area-to-area pay comparisons are useful in determining the
difference in pay levels between two metropolitan areas.  This
type of comparison requires that the base area be changed from
the nation to a specific metropolitan area.  For example, when
the Bloomington area was the base area (pay relative = 100),
average pay for all occupational groups in the Indianapolis area
was 7 percent higher.  (See table 1).  When the base area was
changed to Elkhart-Goshen (pay relative = 100), average pay in
Bloomington was 6 percent lower and average pay in Indianapolis
was not significantly different.  (See table 1.)

     Area-to-area comparisons are now available on the BLS
website at http://www.bls.gov/ncs/ocs/payrel.htm.

Area Definitions:

The Bloomington, Ind. Metropolitan Statistical Area is comprised
of Monroe County in Indiana.

The Elkhart-Goshen, Ind. Metropolitan Statistical Area is
comprised of Elkhart County in Indiana.
The Indianapolis, Ind. Metropolitan Statistical Area is comprised
of Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Marion,
Morgan, and Shelby Counties in Indiana.

What is a pay relative?

     A pay relative is a calculation of pay-wages, salaries,
commissions, and production bonuses-for a given metropolitan area
relative to the nation as a whole.  The calculation controls for
differences among areas in occupational composition,
establishment and occupational characteristics, and the fact that
data are collected for areas at different times during the year.

     Metropolitan areas often differ greatly in the composition
of establishments and occupations that are available to the local
workforce. For example, in Brownsville, Texas, the ratio of
workers in the high-paying management, business, and financial
occupational group to the number of workers in all occupations is
under 6 percent, whereas nationally this ratio is over 8 percent. 1/
In addition to these factors, the NCS collects compensation data
for metropolitan areas at different times during the year.
Payroll reference dates differ between areas which makes direct
comparisons between areas difficult.

     The pay relative approach controls for these differences to
isolate the geographic effect on wage determination. To
illustrate the importance of controlling for these effects,
consider the following example.

     The average pay for professional and related workers in San
Francisco is $37.57 and the average pay for professional and
related workers in the entire United States is $29.76. 2/ A simple
pay comparison can be calculated from the ratio of the two
average pay levels, multiplied by 100 to express the comparison
as a percentage. The pay comparison in the example is calculated
as:
     ($37.57 ÷ $29.76) * 100 ≅ 126

     This comparison does not control for differences between San
Francisco and the nation in the mix of occupations, industries,
and other factors. A more accurate estimate of the geographic
effect of wages in San Francisco can be obtained by taking these
differences into account. Controlling for differences in
occupational composition, establishment and occupational
characteristics, and the payroll reference date in San Francisco
relative to the nation as the whole, the pay relative for
professional and related occupations in San Francisco is equal to 117.

Using pay relative data

Because the NCS is a sample survey, pay relatives derived
from the NCS will differ to some extent from the true pay
relatives that could be calculated only by collecting information
on every job in every establishment.  For similar reasons, pay
relatives derived from the NCS may fluctuate from one year to the
next.  To assist data users with the use of these data, tests
have been conducted to determine whether differences between each
pay relative and the pay relative for the nation as a whole are
statistically significant (that is, the pay for the given
occupation in that area is too different from the national
average to be accounted for by the randomness of the survey's
sample). Similar tests are conducted for the area-to-area
comparisons.  In all tables, statistically significant pay
relatives are denoted with an asterisk (*).  More information on
significance testing is available in the Technical Note.

     Also because of sample variation from year to year, data
users are cautioned about inferring that there have been actual
changes in underlying economic conditions from changes in the
estimated pay relatives between 2005 and 2006.  This caution
applies even more strongly to estimates by occupational group.

                         Technical Note

     Because the NCS is a sample survey, data are subject to
sampling error.  For the data presented here, sampling errors are
differences that occur between the pay relatives estimated from
the sample and the true pay relatives derived from the
population.  It is important to assess whether differences
between each pay relative and the pay relative for the nation as
a whole is likely to be a result of sampling error or of true
differences in pay levels.  To perform this assessment, a test of
statistical significance is conducted.

     The test constructs a 90-percent confidence interval that
assumes the given area's true pay relative is equal to the
national average.  The confidence interval is constructed so that
there is a 90 percent probability the pay relative calculated
from any one sample is contained within the confidence interval.
If from a single sample a calculated pay relative falls within
the confidence interval, then the pay relative is not
statistically significant and the hypothesis that the true pay
relative is equal to the national average is accepted.  However,
if the pay relative falls outside of the constructed confidence
interval then the pay relative is statistically significant at
the 10-percent level.  The hypothesis that the given area's pay
relative is equal to the pay relative for the nation is rejected
and one can conclude with reasonable confidence that the true pay
relative is different from the national average.

     In addition to sampling error, pay relatives are subject to
a variety of sources that can adversely influence the estimates.
The NCS may be unable to obtain information for some
establishments; there may be difficulties with survey
definitions; respondents may be unable to provide correct
information, or mistakes in recording or coding the data may
occur.  Non-sampling errors of these kinds were not specifically
measured.  However, they are expected to be minimal due to the
extensive training of the field economists who gathered the
survey data, computer edits of the data, and detailed data
review.

     Historical pay relative data are available for 1992-1996,
1998, 2002, 2004, and 2005. There are several differences between
the recent pay relatives and the pay relatives for earlier years,
including different industry and occupation classification
systems, varying methodology, and different survey designs.
These differences limit comparability.  The pay relatives for
2004, 2005, and 2006 were calculated using the same industry and
occupation classification systems, methodology, and survey
design.  Nonetheless, comparisons between the estimates for the
two years should be made only with a high degree of caution.

     Pay relatives were estimated using a multivariate regression
technique methodology to control for interarea differences.  This
technique controls for the following ten characteristics:

       --  Occupational type
       --  Industry type
       --  Work level
       --  Full-time / part-time status
       --  Time / incentive status
       --  Union / nonunion status
       --  Ownership type
       --  Profit / non-profit status
       --  Establishment employment
       --  Payroll reference date

     Even accounting for the characteristics used in the current
regression analysis, there is still significant wage variation
across the areas.  The variation is due to differences in wage
determinants that were not included in the model.  Examples of
these determinants include price levels, environmental amenities
such as a pleasant climate, and cultural amenities.

     The pay relative regression methodology introduces another
type of error.  Regression models are subject to specification
error.  The significance test does not specifically measure
specification error.  However, care was taken to minimize this
form of error by an extensive search across specifications for
the model that performs best in terms of predictive accuracy.

     For more details, see Maury B. Gittleman, "Pay Relatives for
Metropolitan Areas in the U.S." Monthly Labor Review, March 2005,
pp. 46-53, and Parastou Karen Shahpoori, "Pay Relatives for Major
Metropolitan Areas," Compensation and Working Conditions, Spring
2003.
_______________________________
1/ Data for this example are based on the May 2006 Occupational
Employment and Wage Estimates,
http://www.bls.gov/oes/current/oessrcma.htm.

2/ Average pay for professional workers in San Francisco and for
the United States are based on wage estimates published in the
San Francisco-Oakland-San Jose, CA National Compensation Survey,
March 2006 and the National Compensation Survey: Occupational
Wages in the United States, June 2006,
http://www.bls.gov/ncs/ocs/compub.htm. 


Table 1.  Pay relatives for major occupational groups in metropolitan areas in Indiana,
area-to-area comparisons, National Compensation Survey, June 2006
------------------------------------------------------------------------------------------------
    Base Area         |	                    |     All 	  |Management, | Professional | Service	
(Pay relative=100)    | Metropolitan area   |  occupation |business,and| and related| |
                      |                     |             |financial   |              |
------------------------------------------------------------------------------------------------
Bloomington, Ind.     | Elkhart-Goshen, Ind.	  106*	      108*     	      97	  106*	
                      | Indianapolis, Ind.	  107*	       92	     101	  107*	
------------------------------------------------------------------------------------------------
Elkhart-Goshen, Ind.  | Bloomington, Ind.	   94*	       92*	     103	   94*	
                      | Indianapolis, Ind.	  101	       85*	     103*	  101	
------------------------------------------------------------------------------------------------
Indianapolis, Ind.    | Bloomington, Ind.          93*	      109	      99	   93*	
                      | Elkhart-Goshen, Ind.	   99	      117*	      97*	   99	
------------------------------------------------------------------------------------------------


Table 1.  Pay relatives for major occupational groups in metropolitan areas in Indiana,
area-to-area comparisons, National Compensation Survey, June 2006
---------------------------------------------------------------------------------------------------------------------------------------
    Base Area         |                     |    Sales    |  Office and   |  Construction  | Installation,|            | Transportation 
(Pay relative=100)    | Metropolitan area   | and related |admin. support | and extraction | maintenance, | Production |  and material
                      |                     |             |               |                | and repair   |            |    moving
---------------------------------------------------------------------------------------------------------------------------------------
Bloomington, Ind.     | Elkhart-Goshen, Ind.	 122*	        105*	         140*	        109*	        101	       97
                      | Indianapolis, Ind.	 122*	        112*	         119*	        112*	        111*	       95
---------------------------------------------------------------------------------------------------------------------------------------
Elkhart-Goshen, Ind.  | Bloomington, Ind.	  82*	         95*	          71*	         92*	         99	      103
                      | Indianapolis, Ind.	 100	        107*	          85*	        103	        111*	       97
---------------------------------------------------------------------------------------------------------------------------------------
Indianapolis, Ind.    | Bloomington, Ind.         82*	         89*	          84*	         89*	         90*	      105
                      | Elkhart-Goshen, Ind.	 100	         93*	         118*	         97	         90*	      103
---------------------------------------------------------------------------------------------------------------------------------------
* The pay relative for this area is significantly different from the average in the metropolitan area at the ten percent level of
  significance.  For additional details, see the Technical Note at http://www.bls.gov/news.release/ncspay.tn.htm

Last Modified Date: December 19, 2007