Author Topic: Average Earnings  (Read 1510 times)

Offline tonytheprof

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Average Earnings
« on: August 26, 2010, 09:49:56 PM »
I see the States statistics unit has published some more data on "average earnings" of limited merit. Footnote 6, where they explain that they don't use the median but the mean.

They don't explain what those terms are to the non-statistician, and why the UK uses the median (as does the USA, and most countries) for wages, rather than the arithmetic mean.

The mean is the average obtained by totalling up all the wages, and dividing by the number of employees. For example, if our wages were (in thousands):

10,10,20,20,20,20,20,20,80,160

then the mean average would be the sum (£380k) divided by the total number (10), giving an "average wage" of £38k!

Wages are not evenly distributed and usually have what is called a skewed distribution, as given in the above. The few high wages unbalance the average so that 80% of the people involved are below average by at least £18k. This is very much what is happening with the figures so happily reported by the JEP.

For a median (which is best practice), you line up all the data from smallest to largest, and the median is the mid-point. It will therefore always be the case that 50% are at the median or higher, and 50% are at the median or lower. In our mock distribution, the median is £20k.

I leave it to the reader to decide why the UK, the USA, and statisticians everywhere use the median when reporting on wages, but Jersey doesn't because apparently it can't get the data at an invididual level!

It seems the States statistic unit has to rely on employer returns rather than raw data from the income tax department which, since the introduction of ITIS, should be quite comprehensive.

We don't even have a median for the public sector, States pay, which is a nonsense, as the States Treasury holds all that data on an individual basis.


Offline imacrappaud

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Re: Average Earnings
« Reply #1 on: August 27, 2010, 02:59:16 AM »
I leave it to the reader to decide why the UK, the USA, and statisticians everywhere use the median when reporting on wages, but Jersey doesn't because apparently it can't get the data at an invididual level!

Short answer, from my point of view. Because it suits them!

Offline man in the street

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Re: Average Earnings
« Reply #2 on: August 27, 2010, 09:41:56 PM »
totaly agree, imacrappaud, our statistics are not the best, it always paints a rosey picture , the hogwash is getting harder to swallow, yet another thing we are powerless to act on.
 its always good for a laugh(if was not so tragic) when they trot out a statement.
 we dont even have a clue how many are here in jersey.
 as for not being able to get information, cobblers

Online boatyboy

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Re: Average Earnings
« Reply #3 on: August 25, 2014, 04:35:19 PM »

The figures below must have come from the States statistics department. Have they got it right this time as wages are growing faster than inflation in many areas.


Bailiwick Express

The full range of average pay by sector in the Average Earnings Index was:

-       Financial services - £1,050 (including bonus) per week or £54,600 per year.

-       Public sector - £900 per week or £46,800 per year.

-       Electricity, Gas and Water - £820 per week or £42,640 per year.

-       Transport, Storage and Communication - £750 per week or £39,000 per year.

-       Construction - £650 per week or £33,800 per year.

-       Manufacturing - £600 per week or £31,200 per year.

-       Other business activities - £550 per week or £28,600 per year.

-       Agriculture - £480 per week or £24,960 per year.

-       Wholesale and retail - £470 per week or £24,440 per year.

-       Hotels, Restaurants and Bars - £380 per week or £19,760 per year.

http://www.bailiwickexpress.com/jsy/news/big-bonus-states-workers/#.U_sBzla9vwI

Islanders are slightly better off than they were last year according to the latest earnings figures.

http://www.bailiwickexpress.com/jsy/news/more-money-your-pocket/#.U_sDD1a9vwI

BB

Online shortport

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Re: Average Earnings
« Reply #4 on: August 25, 2014, 07:15:53 PM »
What we need is a more meaningful breakdown.How many people earn £15-20 k,£20-25k,£25-30k, etc,etc.
Many of these figures are distorted by higher earning managers/owners in each sector.

Offline Jerry Gosselin

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Re: Average Earnings
« Reply #5 on: August 25, 2014, 10:05:32 PM »
Anyone who has ever worked, for example, in the Hotels, Restaurants and Bars, Agriculture or Wholesale and Retail sectors knows that the official average earnings figures quoted for these sectors are ridiculously overstated - and have been for years.

Tony's informative comments submitted here on 26th August 2010 were obviously based on the release the previous day of the Index of Average Earnings (IAS) for June 2010, which declared that the mean average weekly earnings for full-time equivalent (FTE) employees in Jersey was £630 per week (including, for example, Hotels, Restaurants and Bars = £360; Agriculture = £410; Wholesale and Retail = £450). In a footnote to those 2010 figures, the Statistics Unit commented as follows:

Quote

The median average cannot be determined from the data collected for the Index of Average Earnings since this
measure requires earnings at an individual level rather than at a company level. The Statistics Unit has carried out an
Income Distribution Survey in 2009/10 to collect the required information; the results will be published later this year.

http://www.gov.je/SiteCollectionDocuments/Government%20and%20administration/R%20AverageEarnings2010%2020100824%20KG.pdf


One would therefore have expected, as Tony suggested, that the Income Distribution Survey (IDS) for 2009, which was released on 27th September 2010, would have quoted a figure for median weekly average earnings substantially lower than the mean figure previously quoted in the IAS. However, on page 33 of that report, under the heading 'Annex - Comparison with Index of Average Earnings', the equivalent figure is actually £19 higher at £649 per week:o Extract below:

Quote
The IAE, whilst designed to measure change, can also be used to give a measure of employment income per full-time employee. In June 2010, this was £630 per week.

The Income Distribution Survey (and the income reported on throughout this document) includes earnings from employment and pensions, as well as unearned income such as benefits, investments, savings interest, gifts and inheritance. However,a separate analysis was carried out to focus in on the current employment earnings of the respondents. Using the number of hours respondents worked, gross earnings were converted into an hourly rate, based on actual (rather than contractual) hours worked, before being uprated to full-time equivalent. Bonus payments were excluded (as they are in IAE). The earnings data were weighted according to industry, to ensure the sample of jobs was representative of employment in Jersey.

Using this methodology, IDS gives the average employment earnings (per full-time employee of 36.9 hours per week9) as £649 per week.

Given that IAE and IDS are two different surveys, designed to measure different aspects of earnings, the difference of £19 per week (3%) is consistent with the estimated confidence intervals.

http://www.gov.je/Government/Pages/StatesReports.aspx?ReportID=457


The obvious problem is to try and work out what factors the Statistics Unit were relying on in 2010 (and are almost certainly still relying on now) that resulted in such grossly overstated earnings figures. Unfortunately I don't have enough time to conduct thorough research on this. However, I note that the IAS (June 2010) was produced by sending out questionnaires to 430 firms in the private sector, of whom 353 replied. The number of employees whose earnings were used to calculate the IAS in 2010 represented 57% of all workers in Jersey. The first question, which I can't answer, is to query whether this sample could possibly be under representing those workers on the very lowest wages, either because their employers weren't included in the IAS survey, or didn't bother to return their questionnaire. It would appear that substantially the same firms are being included in the IAS every year in order that earnings figures can be matched to the previous year and a figure for the percentage increase in earnings calculated. Therefore if that list of firms is not as representative as it should be, this might help to explain why the IAS figures, although consistent, are always too high.

I further note that the IAS sectoral averages "are then weighted together according to the sectoral share of total employment to give the overall average weekly earnings". According to the Labour Market Report 2010 (link below), whereas the Financial and Legal Activities sector represented 23% of employment at that time, Wholesale and Retail represented 15%, Hotels, Restaurants and Bars was 11% and Agriculture and Fishing just 4%. It is likely the latter two sectors have dropped even further since 2010. This might help to explain why the headline average earnings figure for a Jersey employee (IAS = £630 per week / IDS = £649 per week in 2010) is so high - because a greater weighting is being given in both surveys to the sector with the most employees (Financial and Legal Activities), which also just happens to pay the highest wages. However, if the Agriculture industry, for example, is therefore being under-weighted because of its much smaller proportion of workers, it doesn't quite explain how the average earnings in that sector were as high as £410 per week in 2010 (£480 per week in 2014), particularly as benefits in kind, such as accommodation or free meals, are excluded. Many agricultural workers will earn just the minimum wage. In April 2010, the minimum wage increased to £6.20 per hour. Therefore a person earning minimum wage in that industry in 2010 would have had to work about 66 hours to earn £410 per week, which was the average earnings for Agriculture according to the 2010 IAS. Now I know many of them work long hours, but 66 hours per week?

Perhaps someone like Tony could look at this again and come up with some alternative suggestions...

http://www.gov.je/SiteCollectionDocuments/Government%20and%20administration/R%20LabourMarket%2020101005%20HH.pdf

« Last Edit: August 25, 2014, 10:41:29 PM by Jerry Gosselin »