King County residents might make more money for the same job than those in Whatcom County, but that doesn't tell the full story.
According to the U.S. Census Bureau, the cost of living index here is 21.5 percent lower than King County. How does a cashier or a retail salesperson afford to live King County if it is so expensive? In theory, they would be paid 21.5 percent more than they get paid in Whatcom County, but in reality many get paid more.
The median hourly wage for a cashier in King County is nearly 28 percent more than for Whatcom County and close to 40 percent more for retail salespersons. After adjusting for cost for cost of living differences, in the occupations that employ the majority of the workforce, including cashiers, nurses and secretaries, Whatcom County workers earn approximately 15 percent less than King County workers.
How does this happen? Recent studies have looked into this and have started to explain this gap by looking at the monetary and non-monetary benefits of living in a certain area, something economists call the “second paycheck.” The second paycheck refers to the idea that there are certain advantages to living in an area that are not related to the amount paid by an employer, such as less crime, less traffic or better schools.
The challenge with this concept justifying the difference in wages is that the benefits received from living in either area is unique to every individual. A 21-year-old who lives on her own might prefer to live in Seattle while a 40-year-old who is married with children might prefer to live in Bellingham. A young person with a college degree might have different preferences than a young person without one. People with different types of college degrees might have different preferences.
The amount of factors that determine an individual’s second paycheck are too complicated for an analyst to determine, but an individual does evaluate their second paycheck. These values are represented by the differences in pay beyond those required by cost of living. By continuing to study preferences of various demographics in choosing a place to live, economists can begin to determine if the difference in pay between areas is simply the difference in preference or if it is actually inequitable.