Wage and job-skill distributions in the National Compensation Survey

Cindy Cunningham, Robert Mohr
2017 Monthly labor review  
Using nationally representative data on the specific skills required for individual jobs, we study how wage and skill distributions vary with firm type, as defined by a firm's median wage. We show that firms typically do not specialize by hiring similar workers. On the contrary, the distribution of wages and skills at middle-and high-wage firms is nearly as broad as the distribution in the entire population. Low-wage firms, however, have a more compact distribution of skills. The wage and skill
more » ... The wage and skill distributions in high-wage firms skew leftward, whereas the distributions in low-wage firms skew rightward. We show that the skill requirements of low-wage jobs differ modestly by firm type, while the skill requirements of highwage jobs are lower at high-wage firms than at low-and middle-wage firms. Wages and skills are central to the study of labor economics. However, there are still surprisingly large gaps in what we know about the distribution of both wages and skills within and across firms. The arrival of matched employer-employee data allows for some such comparisons. But because observable characteristics such as education tend to be poor proxies for job skills, it remains difficult to generate a deep understanding of how skills and wages are related across firms. This article examines the distribution of wages and skills for a nationally representative sample of U.S. firms. The data provide detailed information about the types of skills required for specific jobs. We show substantial variation in the distributions of wages and skills across firm types. We sort firms by their median wages to examine how wages and skills are distributed across low-, middle-, and high-wage firms. Do high-wage firms pay all workers higher-than-average wages? Or do they merely have a right-skewed distribution of wages, paying higher wages to workers at the top of the distribution? Also, is the distribution of wages matched by a similar, underlying distribution of skills?
doi:10.21916/mlr.2017.3 fatcat:ufz5xttpqjejtnk3ovk7xnqfyu