How are we doing?
In 2021, the wage distribution for the Tucson Metropolitan Statistical Area (MSA) fell short at every percentile compared to the state of Arizona. Low-wage earners (those in the 10th percentile) in Tucson earned $28,010, just slightly less than the 10th percentile wage for Arizona ($28,570). Low-wage earners in Tucson and Arizona earned more than the 10th percentile wage for the U.S. ($23,980). When comparing median wages, those in Tucson earned $1,450 less than Arizonans and $7,710 less than the nation. In the U.S., 90% of jobs paid less than $102,810 per year, compared to $96,430 in Tucson, a $6,380 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 3.4 times more than low-wage earners (those in the 10th percentile).
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 the 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 2021, the 90/10 ratio for the Tucson MSA was 3.4 while the U.S. had a 90/10 ratio of 4.3. In Tucson, wage earners at the 90th percentile earned $96,430, which is 3.4 times more than workers at the 10th percentile. That difference was higher for the U.S. at 4.3, reflecting a wage of $102,810 for those in the 90th percentile and $23,980 for those in the 10th percentile.
The Tucson Metropolitan Statistical Area (MSA) had the least wage inequality when compared to other MSAs around the West. Tucson’s 90/10 ratio was 3.4, meaning that wage earners in the 90th percentile earned 3.4 times more than wage earners in the 10th percentile. Austin had the largest wage inequalities, by far, with a 90/10 ratio of 5.0.
What are the key trends?
Wage disparities increased or remained consistent between 2001 and 2016 for the Tucson MSA, the state of Arizona, and the U.S. However, in 2017 the wage disparity or 90/10 ratio declined significantly for Arizona and Tucson. This decrease may reflect, in part, the increase in the minimum wage in Arizona during 2017. In 2021, the 90/10 ratio for Tucson was 3.4, down from a high of 4.6 in 2006 and at its lowest level since 2001. The state of Arizona’s 90/10 ratio has decreased to 3.5, and the nation’s level decreased to 4.3. The minimum wage continued to rise through 2021. Due to the COVID-19 pandemic, many individuals received government stimulus which helped to off-set any reduction in wages or employment during that time.
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.