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Cities, skills and wages in the United States

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Last updated: March 20, 2012

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Since the 1970s the United States has been shifting from a manufacturing-based economy to one centered on services and information technology. This transition has had a wide range of impacts, including the availability of certain jobs, the wages individuals receive and the skills and education that work requires. A 2012 study published in the Journal of Economic Geography, “Cities, Skills and Wages,” analyzes employment data in the United States to better understand how job skills affect wages in cities of different sizes.

The researchers, based at the Rotman School of Management and Institute for Competitiveness and Prosperity in Toronto and the Jönköping International Business School in Sweden, analyzed data from the U.S. Bureau of Labor Statistics (BLS) in 1999 and 2008. The authors separated the 728 jobs and 87 skills tracked by the BLS into three broad skill categories — analytic, social intelligence and physical. They then looked at where the jobs were distributed and the wages paid, controlling for regions’ population, density and industry structure, and workers’ education levels and immigration status.

The study’s findings include:

  • Analytic and social intelligence skills are positively correlated with higher wages. “Even when we control for other factors affecting regional wages, such as population, density, human capital, industry structure and immigration, the variables for analytical and social intelligence skills remain strong and statistically significant.”
  • Jobs that require analytic and social intelligence skills, which benefit from “clustering,” tend to concentrate in larger, denser metropolitan areas.
  • Skills are a much better predictor of wages than education level. “While the return to a college education has remained relatively flat between 1999 and 2008, the return to skills has more than doubled.”
  • Over time, the proportion of jobs requiring high physical skills have declined everywhere except in small cities. “This implies that physical skills are shifting toward smaller and medium-sized regions. Thus, physical skills do not appear to benefit from city size or concentration.”
  • Physical skills appear to be associated with lower wages, though this was not a statistically significant finding.

The authors state that the findings do not indicate causality — “whether jobs attract people or vice versa.” But broadly, they found that salaries are influenced by the type of skill associated with a given job, not just the population that performs it. “Since wage levels reflect individual productivity levels, we can assume that these underlying skills add to the ability to perform work over and above those of education.”

Keywords: employment, entrepreneurship, small business, creative class, gentrification, clustering, cluster effect, agglomeration effects


Writer: | March 20, 2012

Citation: Florida, Richard; Mellander, Charlotta; Stolarick, Kevin; Ross, Adrienne. "Cities, Skills and Wages," Journal of Economic Geography, July 2011. doi: 10.1093/jeg/lbr017.

Study analysis

Read the full study titled "Cities, Skills and Wages.”

  1. What are the study's key technical term(s)? Which ones need to be put into language a lay audience can understand?
  2. Do the study’s authors put the research into context and show how they are advancing the state of knowledge about the subject? If so, what did the previous research indicate?
  3. What is the study’s research method? If there are statistical results, how did the scholars arrive at them?
  4. Evaluate the study's limitations. (For example, are there weaknesses in the study's data or research design?)
  5. How could the findings be misreported or misinterpreted by a reporter? In other words, what are the difficulties in conveying the data accurately? Give an example of a faulty headline or story lead.

Newswriting and digital reporting assignments

  1. Write a lead, headline or nut graph based on the study.
  2. Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
  3. Compose two Twitter messages of 140 characters or fewer accurately conveying the study’s findings to a general audience. Make sure to use appropriate hashtags.
  4. Choose several key quotations from the study and show how they would be set up and used in a brief blog post.
  5. Map out the structure for a 60-second video segment about the study. What combination of study findings and visual aids could be used?
  6. Find pictures and graphics that might run with a story about the study. If appropriate, also find two related videos to embed in an online posting. Be sure to evaluate the credibility and appropriateness of any materials you would aggregate and repurpose.

Class discussion questions

  1. What is the study’s most important finding?
  2. Would members of the public intuitively understand the study’s findings? If not, what would be the most effective way to relate them?
  3. What kinds of knowledgeable sources you would interview to report the study in context?
  4. How could the study be “localized” and shown to have community implications?
  5. How might the study be explained through the stories of representative individuals? What kinds of people might a reporter feature to make such a story about the study come alive?
  6. What sorts of stories might be generated out of secondary information or ideas discussed in the study?

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