Tag Archives: Wages and salaries

New Data on Employment and Wages in U.S. Establishments with Foreign Ownership

Did you know that U.S. establishments at least partially owned by foreign companies employed 5.5 million U.S. workers in 2012? That was 5.0 percent of U.S. private-sector employment. The U.S. Bureau of Labor Statistics recently partnered with the Bureau of Economic Analysis to produce new data on foreign direct investment in the United States. These two agencies created a new, richer dataset on employment, wages, and occupations in U.S. establishments that have at least one foreign owner.

So how do we define foreign direct investment anyway? In the simplest sense, it is when a U.S. establishment has an owner from another country with at least a 10-percent stake. We consider any establishment that does not meet this threshold as domestically owned. The new data are more detailed than any data previously available on foreign direct investment in the United States. This first set of data is for 2012, but the agencies plan to work together to produce more recent data soon.

Nearly two-thirds of jobs in establishments with foreign ownership had European ownership (3.5 million jobs). The United Kingdom accounted for 874,000 of these jobs. Asia accounted for 17 percent (936,000 jobs) of jobs in U.S. establishments with foreign ownership. Canada accounted for 12 percent (671,000 jobs). The remaining world regions together accounted for less than 8 percent.

Now let’s look at how employment in establishments with foreign ownership breaks down within the United States. The map below shows the percent of private employment in establishments with foreign ownership in each state. South Carolina had the largest share of private employment in establishments with foreign ownership, 8.0 percent. Other states with large shares include New Hampshire, Michigan, Connecticut, New Jersey, and Indiana.

Map showing  each state's percent of private employment in establishments with foreign ownership, 2012

Editor’s note: Data for this map are available in the table below.

Each state’s percent of employment in establishments with foreign ownership depends in part on the industry mix in the state. The chart below shows the percent of each industry’s employment in establishments with foreign ownership. In mining, quarrying, and oil and gas extraction, 14.7 percent of employment is in establishments with foreign ownership. A large share of employment in Alaska is in this industry. Alaska’s share of employment in establishments with foreign ownership, 5.7 percent, is above the national average. Alaska’s vast energy resources may play a role in its share of employment in establishments with foreign ownership.

About 13.2 percent of all employees in manufacturing work in establishments with foreign ownership. Michigan has a large share of employment in manufacturing, and also a large share of employment in establishments with foreign ownership.

Chart showing percent of private employment in establishments with foreign ownership, by industry, 2012

Editor’s note: Data for this chart are available in the table below.

Now let’s turn from employment to wages. The map below shows how wages in establishments with foreign ownership compare with wages in domestically owned establishments across the country. We make this comparison by calculating the ratio of what workers make in average wages in establishments with foreign ownership compared to the average wage in domestically owned establishments. Wage ratios greater than one mean the average for establishments with foreign ownership is higher than for domestically owned establishments. The U.S. wage ratio in 2012 was 1.57, and every state had a wage ratio greater than one. The highest wage ratio was in New York, at 1.98. At the other end of the spectrum, Vermont had a wage ratio of 1.05.

Map showing each state's ratio of average wages in establishments with foreign ownership to domestically owned establishments, 2012

Editor’s note: Data for this map are available in the table below.

Does this mean every establishment with foreign ownership pays higher wages than domestically owned establishments? Let’s analyze wage ratios by industry. We see that the health care and social assistance industry had a wage ratio of 0.86 in 2012. All other major industry groups had wage ratios of 1.00 or higher. The finance and insurance industry had a wage ratio of 1.82.

Want to know more about these data? See our Spotlight on Statistics, “A look at employment and wages in U.S. establishments with foreign ownership.”

Chart showing ratio of average wages in establishments with foreign ownership to domestically owned establishments, by industry, 2012

Editor’s note: Data for this chart are available in the table below.

BLS and the Bureau of Economic Analysis hope to continue this interagency collaboration. Our goal is to merge and analyze more recent data from both agencies. When agencies work together to produce new datasets with little increase in cost to the public, all data users benefit. Producing accurate, objective, relevant, timely, and accessible products is the BLS mission. This collaboration to produce new relevant data allows us to improve our service to the American people.

Percent of private employment in establishments with foreign ownership, 2012
StateEmployment share

National

5.0%

Alabama

5.4

Alaska

5.7

Arizona

3.9

Arkansas

4.5

California

4.2

Colorado

4.6

Connecticut

6.5

Delaware

6.0

District of Columbia

3.4

Florida

3.6

Georgia

5.5

Hawaii

6.0

Idaho

2.9

Illinois

5.1

Indiana

6.4

Iowa

4.0

Kansas

5.7

Kentucky

6.2

Louisiana

3.9

Maine

6.1

Maryland

4.7

Massachusetts

6.3

Michigan

6.6

Minnesota

4.0

Mississippi

3.4

Missouri

4.0

Montana

1.8

Nebraska

3.6

Nevada

3.8

New Hampshire

6.9

New Jersey

6.5

New Mexico

3.0

New York

5.8

North Carolina

6.2

North Dakota

3.8

Ohio

5.3

Oklahoma

3.6

Oregon

3.4

Pennsylvania

5.5

Rhode Island

6.1

South Carolina

8.0

South Dakota

2.1

Tennessee

5.5

Texas

5.3

Utah

4.0

Vermont

3.7

Virginia

5.1

Washington

4.0

West Virginia

4.8

Wisconsin

3.5

Wyoming

3.8
Percent of private employment in establishments with foreign ownership, by industry, 2012
IndustryEmployment share

Mining, quarrying, and oil and gas extraction

14.7%

Manufacturing

13.2

Management of companies and enterprises

9.6

Wholesale trade

9.0

Information

7.8

Finance and insurance

7.5

Utilities

7.3

Transportation and warehousing

6.3

Administrative and waste services

6.0

Professional, scientific, and technical services

5.5

Total private

5.0

Retail trade

4.7

Real estate and rental and leasing

2.2

Construction

1.8

Accommodation and food services

1.6

Other services (except public administration)

1.3

Agriculture, forestry, fishing, and hunting

1.0

Health care and social assistance

0.9

Arts, entertainment, and recreation

0.7

Educational services

0.6
Ratio of average wages in establishments with foreign ownership to domestically owned establishments, 2012
StateWage ratio

National

1.57

Alabama

1.44

Alaska

1.63

Arizona

1.28

Arkansas

1.43

California

1.49

Colorado

1.53

Connecticut

1.53

Delaware

1.78

District of Columbia

1.08

Florida

1.52

Georgia

1.36

Hawaii

1.06

Idaho

1.30

Illinois

1.61

Indiana

1.56

Iowa

1.48

Kansas

1.56

Kentucky

1.36

Louisiana

1.67

Maine

1.26

Maryland

1.28

Massachusetts

1.46

Michigan

1.84

Minnesota

1.50

Mississippi

1.63

Missouri

1.55

Montana

1.63

Nebraska

1.35

Nevada

1.47

New Hampshire

1.39

New Jersey

1.64

New Mexico

1.22

New York

1.98

North Carolina

1.47

North Dakota

1.55

Ohio

1.49

Oklahoma

1.40

Oregon

1.41

Pennsylvania

1.43

Rhode Island

1.31

South Carolina

1.43

South Dakota

1.45

Tennessee

1.42

Texas

1.80

Utah

1.45

Vermont

1.05

Virginia

1.23

Washington

1.40

West Virginia

1.33

Wisconsin

1.38

Wyoming

1.72
Ratio of average wages in establishments with foreign ownership to domestically owned establishments, by industry, 2012
IndustryWage ratio

Finance and insurance

1.82

Construction

1.62

Total private

1.57

Accommodation and food services

1.51

Real estate and rental and leasing

1.50

Arts, entertainment, and recreation

1.45

Other services (except public administration)

1.44

Agriculture, forestry, fishing, and hunting

1.40

Wholesale trade

1.39

Professional, scientific, and technical services

1.39

Mining, quarrying, and oil and gas extraction

1.28

Management of companies and enterprises

1.23

Retail trade

1.20

Educational services

1.19

Manufacturing

1.18

Utilities

1.15

Administrative and waste services

1.13

Information

1.05

Transportation and warehousing

1.00

Health care and social assistance

0.86

Why This Counts: Employer Costs for Wages and Benefits

The U.S. Bureau of Labor Statistics releases a wide range of economic statistics and analysis almost every day. Families, employers, policymakers, and others use these statistics to make better decisions. BLS data inform Americans and people around the world about employment, prices, compensation, productivity, worker safety, and a host of other topics. Today I am using my blog series, “Why This Counts,” to shed some light on the quarterly Employment Cost Index, a measure of changes in employer costs for wages and benefits.

The Employment Cost Index—the ECI—began in the mid-1970s by tracking changes in employer costs for wages in the private sector. Over time, the program has expanded to include the cost of about two dozen benefits and currently includes both private industry and state and local government workers.

We track a sample of employers and occupations selected to represent the U.S. economy. We return to these employers quarterly and ask them to update their information on the cost of wages and benefits. By tracking the same occupations over time, the ECI is free from changes in wage and benefit costs due to shifts in employment from one industry or occupation to another.

The ECI provides quarterly rates of change. The data are for March, June, September, and December, and we release the numbers a month later. Today we released the March 2015 data. I’m always impressed at how quickly we can collect and report on dozens of pieces of information from thousands of employers each quarter. We’re able to do this because of the excellent cooperation we have with employers; my thanks to those who provide data for all our programs. We’re also able to release the data quickly thanks to our regional office staff who work with employers and our national office staff who turn the raw data into useful numbers and publish the results.

As we reported today, total compensation costs (wages and benefits together) rose 0.7 percent for the quarter and 2.6 percent over the past year. These data are for all workers in private industry plus state and local government—a group we call civilian workers. Wages for civilian workers grew 0.7 percent over the quarter and 2.6 percent over the year; benefit costs rose 0.6 percent over the quarter and 2.7 percent over the year.

The cost of many benefits tracks closely with employee wages. For example, as wages increase, an employer’s cost to provide vacation benefits increases about the same rate. This is also true for 401(k) retirement plans; the employer cost for these plans—usually a match of employee contributions—is a percent of the employee’s pay and increases as pay increases.

In contrast, the cost of some benefits moves independent of wages. Health insurance is one notable example. For the 12 months ending in March, private employer costs for health insurance rose 2.5 percent. As the chart shows, the change in health insurance costs can drive the change in overall benefit costs.

why-this-counts-eci

The ECI provides evidence of the slow growth in wages since the 2007–2009 recession. From December 2002 to December 2008, private industry wages grew at an average rate of 2.9 percent per year. From December 2008 to December 2014, private industry wages grew at an average rate of 1.8 percent per year.

The ECI can provide an early warning of inflationary pressure in the economy. Rising compensation costs may lead firms to raise prices for their goods and services. In a preview of this week’s economic calendar, one media outlet said about the ECI, “It’s seen by some as perhaps the best gauge of whether labor costs are on the rise. This is of utmost importance to the market, since if labor costs are accelerating, it could spur the Fed to make monetary policy tighter.” In addition, employers look to the ECI when setting their budgets for pay raises; employers and workers look to the ECI during salary discussions or contract negotiations.

We also use the data on wages and benefits to estimate the cost in dollars and cents per hour worked that employers spend. We call this series Employer Costs for Employee Compensation. This series provides information on the share of compensation dollars that go toward wages versus benefits, and toward individual benefits. In December 2014, about 69 percent of the compensation dollar of private sector employers went toward wages, with the rest going toward benefits. The most expensive individual benefit for private industry employers was health insurance, costing employers $2.39 per hour worked in December 2014.

You can visit the Employment Cost Trends page of our website to get current and historical data and analysis and learn more about how we collect the data.