Manhattan Outpaces LA and Cook Counties, 3Q11

Numbers just released by the Bureau of Labor Statistics allow us to track the relative economic performance of large counties through the third quarter of 2011. This week for the first time we have the dollars associated with payroll jobs in each area.As a model for understanding the numbers, let's take  the three largest counties - Los Angeles, Cook County and Manhattan (New York County). Los Angeles County has the most jobs - 3.9 million of them, 3.0 percent of all jobs in the United States. Cook County is second with 2.4 million jobs, 1.8 percent of all U.S. jobs. Finally, Manhattan has 2.3 million jobs, 1.8 percent of all U.S. jobs.  The three counties together have 6.6 percent of all U.S. jobs.
The relative size of the largest counties are shown in this BLS chart posted Friday, March 30. Los Angeles County encompasses the City of Los Angeles and Cook County encompasses the City of Chicago. New York City is the only U.S. city that includes more than one county. New York County is coterminous with the Borough of Manhattan, which is not the largest borough by number of residents but includes approximately three-fourths of the Gross City Product.  

Table 1. Employment in Large Counties

  USA and Three Largest Counties

    September 2011('000)
United States          130,524.7

 1.Los Angeles, Calif.    3,872.5       

 2.Cook, Ill.             2,402.7

 3.New York, N.Y.         2,332.5

Source: Data for this and the next four tables: Bureau of Labor Statistics, Quarterly Census of Employment and Wages, QCEW report for September (3Q) 2011, March 28, 2012.

It is already known that Manhattan grew jobs at the fastest rate, 2.6 percent, during the year ending September 2011. This is a full percentage point faster than the United States as a whole. Cook County was also above the national average for job growth but Los Angeles grew jobs only half as fast as the nation. (See Table 2.) 

 Table 2. Increase in Employment

  USA and Three Largest Counties  

  September 2010-11 ('000 and %)
United States     2,040.9 (1.6%)

New York, N.Y.       60.6 (2.6%)         

Cook, Ill.           48.5 (2.0%) 

Los Angeles, Calif.  31.1 (0.8%)

The question that the new data on average wages help us to answer is - what happened to average salaries in the counties? Did job growth reflect a growth of less-well-paid jobs, or was the job growth occurring in better-paid industries? The average wage in the third quarter of 2011 was $916 a week in the United States and it was $1,647 in Manhattan, $1,047 in Cook County and $1,026 in Los Angeles. (See Table 3.)

  Table 3. Average Weekly Wage

  USA and Three Largest Counties       

         3rd quarter 2011                  

United States                  $916

New York, N.Y.                1,647

Cook, Ill.                    1,047

Los Angeles, Calif.           1,026

If one multiplies the total jobs in Table 1 by the average weekly wage in Table 3, it generates a good first approximation of the relative Gross County Product, i.e., the economic product of people working in each county. This number was the foundation for the NYC Comptroller's Office estimates of New York City's Gross City Product in the 1990s. New York City was the first city to develop Gross City Product estimates, at a time when Gross State Products were not available from the Bureau of Economic Analysis, as they are now.
Finally, we look at how the third-quarter 2011 average wage compares with the same quarter in 2010. This shows wages increasing faster in the rest of the United States. The average wage increase between the third quarter of 2010 and the third quarter of 2011 was 5.3 percent - from a much lower base than in the three largest counties. The Los Angeles County increase was only slightly below the national average, whereas New York County and Cook County wages rose 0.7 and 1.3 percentage points more slowly than the nation. (See Table 4.)  

Table 4. Increase in Average Weekly Wage

   USA and Three Largest Counties     

 3rd quarter 2011 (% change from 2010)

United States                 5.3%

Los Angeles, Calif.           5.2%           

New York, N.Y.                4.6%

Cook, Ill.                    4.0%

At low levels of growth, the percentage increase in jobs plus the percentage increase in the average weekly wage approximates the percentage increase in the Gross Product.  So the percentage increase of the national GDP would be approximated at 1.6% + 5.3% = 6.9%. The more accurate formula is multiplicative, which gives slightly larger rates of increase than adding the two percentage increases:

     ΔGross County Product = (E+ΔE) x (W+ΔW),

     where E is Employment and W is Wages.

For the nation, the more accurate figure for the change in the wage component of the Gross Product is 7.0%. (See Table 5.)

Table 5. Increase in Wage Component of Gross Product

         USA and Three Largest Counties     

       3rd quarter 2011 (% change from 2010)

                    A=(E+ΔE) B=(W+ΔW)C=AxB   ΔGCP

United States       101.6%   105.3%  107.0%  7.0%

New York, N.Y.      102.6%   104.6%  107.3%  7.3%
Cook, Ill.          102.0%   104.0%  106.1%  6.1%

Los Angeles, Calif. 100.8%   105.2%  106.0%  6.0%

From the last column in Table 5 we can now answer the question – how have the wage sectors of the three largest counties been performing based on the latest county employment and wage data?
The wage component of the nation’s economy grew 7 percent. The nation was led by New York County, which grew 7.3 percent. The other two counties’ wage economies lagged behind. Wages grew at a faster rate in Los Angeles County than in New York County, but from a very much lower base (as shown in Table 3).
We get a general picture of the relative performance of the county wage economies from the QCEW data. We can then drill down into the industry components to understand which parts of each wage economy are contributing the most. This will be the subject of another post.