Under Fire in Arizona
Being from Arizona, I wanted to discover about local government. One of the datasets they have available was of City of Phoenix salary for fulltime employees. I wanted to check if the salary raises across the employees vary significantly or not depending on their income level. In other words, I wanted to see if salary raises are more likely if you get paid a higher salary.
To test this I will use the below hypothesis:
𝐻𝑜: There is no difference in salary increase between above average and below average income earners.
𝐻𝑎: There is a difference in salary increase between above average and below average earners.
𝑎=.05 significance level
To accomplish this, I first cleaned the data to make sure only the employees that stayed employed by the city of Phoenix are included in our analysis. The next step is to divide them into two groups: Above average and Below average income. The manner of defining the average is by the City of Phoenix employee salary average of both years.
The average salary for:
2014: $65800
2020: $71800
both: $68800
Next we need to calculate the salary increase for this. Unfortunately we found that some employees had a decrease in salary. This group will be excluded, to keep only those that are are performing well and those that are not retired.
Above we can see that those with above average income salary seem to have a higher rate of salary increases. On average those with higher income salary find themselves with an increase of $6049.36 while those with below average get $5829.31. The next step was to calculate this and not rely on the visual cues.
After conducting a t-test to compare both groups to see if there is a significant difference between salary increase we found the p-value to be .93. We fail to reject the null hypothesis at the 0.05 significance level and conclude the mean salary increase for above average income earners and below average income earners is not different.
Conclusion:
This is great news! The City of Phoenix treat their employees fairly. It's a bit discouraging to find that over the span of 7 years, their income increase by about $6,000, that's about 1.5% per year. Government work is not the highest paid, but they usually come with good retirement benefits. We can address that in another analysis post.
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