Sunday Forum: Paid less in Pittsburgh
Share with others:
We are more educated than the average American and more of us are in "professional" roles. We are older than the average American and have more work experience. But even with all of this schooling, experience and responsibility, recent data show that the median earnings of Pittsburgh-area workers are significantly below the national average.
As a region, we have wondered why our young people continue to leave the area, and we have explored many ways to encourage them to stay. However, maybe the problem is that we expect our highly skilled workforce to take a pay cut in order to remain in Pittsburgh -- in effect, to pay a "Pittsburgh tax."
The idea of a Pittsburgh tax certainly reflects my story. I was born and raised in Pittsburgh, completing my bachelor's degree in mechanical engineering from Carnegie Mellon University in the mid-1990s. Upon graduation, I felt that I had limited opportunities in Pittsburgh, so I left for a well-paying, out-of-state job with a Fortune 100 Company.
After five years, I decided that I wanted to come back to Pittsburgh, although I was fairly sure that I would have to take a pay cut to do so. I completed my MBA at the University of Pittsburgh in the 11-month full-time MBA program, and, upon graduation, ended up taking a 10 percent cut in pay to work for another Fortune 100 company in Pittsburgh as a senior financial analyst, even though I now had my masters degree.
I'm not alone. The majority of my high school and college friends have left Pittsburgh for the better opportunities (and higher salaries) found in other places, such as neighboring Ohio and North Carolina. My best friend from CMU is in Oregon, working a top-notch job with Intel. With many of my Pittsburgh-based friends gone, I wondered -- is it just my experience, or do we really make less money (for comparable work) in Pittsburgh?
Being an engineer with an MBA, I'm a numbers person, so I decided to do my own analysis. The source of my data is the 2005 American Community Survey, which is conducted by the U.S. Census Bureau and provides a vast quantity of information.
I picked five eastern cities where my Pittsburgh friends have moved in order to find better job opportunities: Cleveland, Cincinnati, Charlotte, Raleigh and Philadelphia. Next, I examined the income statistics for each of these cities and Pittsburgh, comparing the data to determine whether we Pittsburghers are indeed underpaid in comparison.
The analysis confirmed my initial thoughts -- Pittsburghers' median and average incomes are below those in all five of these similar cities. Our incomes are only slightly less than those living in Cleveland, but we make, on average, 13 percent less than those living in Cincinnati, 20 percent less than those living in Charlotte, almost 24 percent less than those living in Philadelphia and nearly 34 percent less than those living in Raleigh.
Worse yet, according to CNN's Cost of Living Calculator -- which also uses salary and cost data provided by the Census Bureau -- only Philadelphia has a higher cost of living than Pittsburgh.
So, what could account for these large discrepancies in salary between Pittsburgh and these other cities?
I decided to compare education levels to see how Pittsburghers stack up. While Pittsburgh has a lower percentage of college graduates than Charlotte, Raleigh and Philadelphia, only Raleigh has a higher percentage of people with either a high school or college degree. Many more people in Charlotte and Raleigh have at least some college, but Cincinnati and Cleveland folks are definitely less-educated than us (even though they make more money and have a lower cost of living).
Another thought is that the other cities may have more, higher-paying corporate jobs than Pittsburgh. Pittsburgh has a higher proportion of people employed in health care than other cities, which could make our numbers lower (although our health-care workers are making less than those in other cities, too). Pittsburgh also has a higher concentration of education and banking jobs, which also are historically lower-paying.
The other possibility is that we do indeed pay a Pittsburgh tax. Employers know that people want to live in Pittsburgh for a variety of reasons (summed up by our moniker as "America's Most Livable City") and therefore can pay less to those living in Pittsburgh.
But we've always been told that our salaries are lower because we have a low cost of living. While our cost of living may be less than that in New York, San Francisco and Philadelphia, it isn't less than comparable cities such as Cincinnati, Cleveland and Charlotte. So why should we be paid less?
First Published September 30, 2007 12:00 am