Pay Level Still Affected by Zip Code

Mercer Human Resource Consulting’s 2004 Geographic Salary Differentials found that the 2004 findings suggest that geographic pay variations are less pronounced, but still evident at higher pay levels. For example, for a job with a median salary of $60,000 nationally, pay varies from a low of $54,480 (-9.2%) in Little Rock, Arkansas to a high of $71,040 (+18.4%) in San Francisco .

Even at $90,000, there are still pay differences depending on zip code. Cities like Buffalo, New York, Albuquerque, New Mexico, and Omaha, Nebraska, pay less at $84,690, $85,320, and $85,410, respectively. Meanwhile, cities like San Francisco, San Jose, and New York lead the salary list with $103,410, $103,230, and $103,050, respectively. Mercer said the variation from highest to lowest was about 21%.

According to Darrell Cira, a senior compensation consultant in Mercer’s Philadelphia office, a review of Mercer’s survey data over the past four years clearly indicates that salaries are growing at different rates around the country.

For example, salaries in Washington, D.C., and Seattle, Washington have increased several percentage points faster than the national median, while salaries in Buffalo and Portland, Oregon have grown several percentage points slower.

“We’re seeing a differential shift in pay relative to the national market that is undoubtedly a result of supply and demand factors in the geography,” explained Cira in a news release. “Although our study does not identify these local factors, it supports what many hiring managers in these geographies have been saying over the past few years and reinforces the importance of vigilance and year-over-year monitoring of pay levels. Organizations that have not looked at their local pay scales in the past four or five years should review them to make sure salaries and salary scales are still competitive.”

Mercer said the analysis highlights the challenges faced by large employers with employees in multiple locations throughout the U.S. Sensitive compensation issues can arise when an employee moves from a relatively high-salary area to a relatively low-salary area, or vice versa, the firm said.

The study can be purchased by contacting Mercer at www.imercer.com or 800-333-3070. The cost is $495.