Department of Labor and Regulation

Title - Labor Market Information Center

What are the differences between wage data and average annual pay?

Average annual pay (available on this website) produced by the Quarterly Census of Employment and Wages (QCEW) program is computed by dividing total annual pay of employees covered by UI programs by the average monthly number of these employees.  In addition to salaries, average annual pay data include bonuses, the cash value of meals and lodging when supplied, tips and other gratuities, and, in some states, employer contributions to certain deferred compensation  plans such as 401(k) plans, and stock options.  Monthly employment is based on the number of workers who worked during or received pay for the pay period including the 12th of the month.  With few exceptions, all employees of covered firms are reported, including production and sales workers, corporation officials, executives, supervisory personnel, and clerical workers. Workers on paid vacations and part-time workers also are included. 
Average annual pay is affected by the ratio of full-time to part-time workers as well as the number of individuals in high-paying and low-paying occupations.  When comparing average annual pay levels between industries and/or states, these factors should be taken into consideration.  Annual pay data only approximate annual earnings because an individual may not be employed by the same employer all year or may work for more than one employer.  Also, year-to-year changes in average annual pay can result from a change in the proportion of employment in high- and low-wage jobs, as well as from changes in the level of average annual pay.

Wages (available on this website) for the Occupational Employment Statistics (OES) survey are straight-time, gross pay, exclusive of premium pay. Base rate; cost-of-living allowances; guaranteed pay; hazardous-duty pay; incentive pay, including commissions and production bonuses; and tips are included. Excluded are overtime pay, severance pay, shift differentials, non- production bonuses, employer cost for supplementary benefits, and tuition reimbursements.

For each occupation, respondents are asked to report the number of employees paid within specific wage intervals. The intervals are defined both as hourly rates and the corresponding annual rates, where the annual rate for an occupation is calculated by multiplying the hourly wage rate by a typical work year of 2,080 hours. The responding establishments are instructed to report the hourly rate for part-time workers, and to report annual rates for occupations that are typically paid at an annual rate but do not work 2,080 hours per year, such as teachers, pilots, and flight attendants. Other workers, such as some entertainment workers, are paid hourly rates, but generally do not work 40 hours per week, year round. For these workers, only an hourly wage is reported.

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Marcia Hultman, Secretary
700 Governors Drive
Pierre, SD 57501-2291
Tel. 605.773.3101
Fax. 605.773.6184