Young employees are paid more in the Midwest

Andrey Kamenov

Andrey Kamenov, Ph.D. Probability and Statistics

When did you get your first job? Today we will look at the income levels of young employees in different states in America.

The Current Population Survey data provided by the Census Bureau allows us to see the income distributions for many different groups of people. How much does median income increase in the few years following the college graduation? Which states pay less to employees under 30?

One technical note: as explained in our previous posts on the topic, we fit the raw income data with the so-called Generalized Beta distribution. It not only allows us to deal with the censored data, but also increases reliability of the calculated distribution characteristics (like median income or inequality coefficient, for example).

Income distribution for people under 30

As seen on the chart, the highest year-over-year increase is generally observed between ages 24 and 25. This isn’t surprising, considering that 24 is the average age of people graduating from college.

The jump in income levels affects the entire distribution, including the uppermost quantile. By the age of 25, one in every 10 employees makes more than $61,500 per year.

Still, it would be interesting to compare the difference between income levels of young employees and their senior colleagues in different states.

It appears that in comparison, younger employees are paid the most in Wyoming, Arkansas and Iowa; the median income of employees between the ages of 25 and 29 is 80 percent of the median income of the 30+ group.

Median income of young employees (compared to the 30+ group)

Identical numbers are observed in two of the most populous states, New York and Texas (77.7 percent). Illinois and Florida are only a few percentage points behind.

One of the largest differences between median incomes is found in California. Here, people in their late twenties earn 1.5 times less than those who are at least 30.

Source(s):

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About Andrey Kamenov

Andrey Kamenov

Andrey Kamenov, Ph.D. Probability and Statistics

Andrey Kamenov is a data scientist working for Advameg Inc. His background includes teaching statistics, stochastic processes and financial mathematics in Moscow State University and working for a hedge fund. His academic interests range from statistical data analysis to optimal stopping theory. Andrey also enjoys his hobbies of photography, reading and powerlifting.

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