Higher wages mean more stable employment numbers

Andrey Kamenov, Ph.D. Probability and Statistics

When exploring U.S. Census Bureau census data, we saw that even within one state, counties may see significantly different changes in local employment numbers.

While we don’t have any personal data, local changes in employment numbers are indicative of the total number of people who have lost their jobs, become employed or even switched careers.

First, we take the variance of employment change in every state, averaged by five major industry sectors.



While we see that there are a few states with significantly higher numbers (three to four times the national average in Vermont and Michigan), there seems to be no clear geographical pattern here.

The pattern emerges once we look at the change of numbers in relation to the average wage. We split all counties into groups of 10 percent by average wage (ignoring those with less than 100 people employed). Calculating the employment change variance for each group, we see that out of the five largest sectors, four apparently show that the variance decreases for counties with higher-paid jobs. For example, comparing the top 10 percent of the counties with the bottom 10 percent, we see that the variance is two to four times larger in the latter. The only sector where the decrease is not very significant is Finance.d_emp_avq_2004_2009

In conclusion, unless you work in finance, the probability of you becoming unemployed or having to switch careers is inversely related to your wage.

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About 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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