State Government Labor Market Definitions

Abstract

A well-defined labor market allows key compensation decision makers to examine the competitiveness of the organization’s pay plan. If the market is poorly defined, estimates of competitors’ pay rates will likely not be accurate. The vast majority of research on labor market definitions has been conducted in the for-profit sector; thus, there is a high need for examining how employers within the public sector define their labor market. A short questionnaire was sent to members of the National Compensation Association of State Governments to enquire about their respective states’ labor markets. Content analysis was conducted on the responses using three main components. These include statements of differentiated markets for types of jobs, a geographic region, and criteria for including an employer within the market.