A Look Back at 2017 and
a Glimpse into the Future
At PayScale, we analyze what matters when determining pay, from education to industry to skills to management
responsibilities. Consistently, at the top of the list of these factors is
location. This year, we map out how location affects pay across the
whole of the United States—and how things changed in 2017.
This map shows how location affects pay after controlling for
the effects of experience, industry, education and management
responsibilities. In blue counties, workers with the same
qualifications and experience earn more than their counterparts
elsewhere. Since employees who relocate bring their education and
skills with them, this map shows where they stand to earn the most.
Who’s Up and Who’s Down?
Two clear patterns emerge for where the money flows in the
U.S. labor market: It’s in the cities, and it’s on the ground. Counties
with major urban areas crop up like oases throughout the Midwest
and the South. Urban areas on the coasts also do very well, from
the Boston-Washington, D.C., corridor to Silicon Valley and
A band of lighter yellow traces the region inland from the
mid-Atlantic seaboard and continuing into the South. Appalachia
and the rural South trail the rest of the United States on several
important indicators for a variety of historical and demographic
reasons, and what our new research highlights is that these effects
are not due only to the geographic dispersion of industries or
How Things Changed in 2017
We also examined how these locational effects changed
from 2016 to 2017. Note that these changes are not closely
correlated with the size of these effects. Some areas that pay
relatively little (e.g., western Nebraska or the crossroads region
in Louisiana) are falling farther behind, while others (e.g.,
central Colorado to northern New Mexico and South Dakota)
2018 Predictions and Beyond
1. 2018 will be the year of the bonus.
Wage growth has been relatively flat and we expect that
pattern to persist in 2018, in part due to the Republican tax-reform legislation. It makes drastic cuts to the corporate tax
rate, which its authors claim will lead to raises for employees.
However, many major companies have been upfront with their
plan to instead spread the wealth to shareholders. Businesses
will need to offer some type of economic incentive to keep and
attract top talent and we predict this will take the form of higher
and more frequent bonuses.
2. Employers will face an even tighter talent market for hot
The national unemployment rate for November 2017 was
4.1 percent ( 2.1 percent for college-educated workers age
25 and older). Economists regularly agree the rate of “full”
employment is 4 percent—the rate at which everyone who
wants a job has a job. What does this mean for you? It means
there are not a lack of jobs, but rather a lack of workers. The
ability to fill competitive roles will require companies to get
creative in their recruiting tactics and compensation strategies,
especially for hot jobs in engineering, data science and
3. Companies will get serious about addressing the gender
PayScale is no stranger to research on the gender pay gap and
has regularly found a persistent pay gap in higher-level positions,
as well as an opportunity gap for women to fill these positions.
4. The healthcare industry will no longer be the job creator
it once was.
Given the administration’s plan to repeal and replace the
Affordable Care Act and technological advances in the fields of
medicine and healthcare mobile apps, we will see employment
in healthcare dip for the first time in years. This reduced demand
for preventative care will lead to job losses, particularly in rural
areas where healthcare jobs are densely concentrated.
5. Move over machine learning, artificial intelligence will
be the new hot buzzword.
Machine learning entered the stratosphere in a big way in
recent years as a top skill for data scientists (the sexiest job of
the 21st century, according to the Harvard Business Review).
Machine learning is actually a subset of artificial intelligence,
which is when a computer mimics human thoughts or decisions,
but artificial intelligence will replace machine learning as the
hot data-science term. We can see evidence of AI overtaking
machine learning in the demand for certain skillsets as the
pay bump employees with AI skills experience overshadows
employees with machine-learning skills ( 13. 8 percent higher vs.
8. 6 percent higher, respectively).
- 2.00 0.00 2.00 4.00 6.00
- 2.00% - 4.00% - 2.00% 0.00% 2.00% 4.00% 6.00%
How Location Affects Pay
2017 Changes in the Effect of Location on Pay