More or less, the financial industry is about money. As a general rule, the best, the brightest, and the most prepared financial professionals get more of it than others. The question here is: which U.S. states have seen financial industry pay grow the fastest over the past 23 years?
As a start, here’s what average pay per employee looks like now (end of 2012). Not surprisingly, the highest paid financial employees are located in New York at $241K, followed by Connecticut at $198K, Massachusetts at $139K, Washington, D.C. at $133K, New Jersey at $117K, Illinois at $108K, Delaware at $108K, and Minnesota at $101K. That’s every geographic area with an average pay above six figures.
On the other end, the lowest paid financial professionals are located in Idaho at $40K, West Virginia at $42K, New Mexico at $43K, Montana at $44K, Mississippi at $45K, Wyoming at $47K, South Dakota at $48K, and Oklahoma at $49K. That’s every geographic area with an average annual pay less than $50K.
With the current conditions as the background, the following figures show how financial industry pay has changed by state since 1990. (Note on how to read the charts: the first chart shows average pay across time according to color and size. Essentially, the larger the circle or the more orange the circle, the more recent the figures. The legend at the bottom of the graph contains the details. The second chart shows the cumulative growth in average pay across U.S. state from 1990 to 2012.)
Perhaps surprisingly, pay per employee in the financial industry across U.S. states was much more bunched together in 1990, with the highest at the time being $47K in New York and the lowest being Delaware of $19K, or a difference of $28K. Times, and pay, have changed a lot since 1990.
The difference between the highest and lowest paid financial industry employees having widened a good deal over the years, with pay differential growing to $201K (New York at $241K and Idaho at $240K).
What’s behind the widening average pay differential from $28K to $201K?
Various theories have been proposed regarding the most influential factors, including value added, cost of living, and clustering. What we do know is that best and brightest in the financial industry, at least as measured by pay, are located in the big financial centers. Overall, the big financial centers continue to dominate the financial world, with New York City, Chicago, Los Angeles, and Philadelphia far ahead of competing states in terms of employment count and average pay per employee. The average pay differential has widened over the years, going from an average difference across states in 1990 of $28K to $241K at the end of 2012. What’s causing the growing differential is still up for debate.
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