The mean salary of federal government employees on the General Schedule is $59,593. The average salary of 30 state employees who do similar work is $58,800 with

= $1500. At the 0.01 level of significance, can it be concluded that state employees earn on average less than federal employees?

What is the statistic value? Round your answer to the nearest hundredths.

1 answer

To determine whether state employees earn less than federal employees at the 0.01 level of significance, we can perform a hypothesis test for the means. We are given the following information:

  • Mean salary of federal employees (\(\mu_0\)): $59,593
  • Mean salary of state employees (\(\bar{x}\)): $58,800
  • Standard deviation of state salaries (\(s\)): $1,500
  • Number of state employees (\(n\)): 30

Step 1: Set up the hypotheses.

  • Null hypothesis (\(H_0\)): \(\mu = 59,593\) (state employees earn the same as federal employees)
  • Alternative hypothesis (\(H_a\): \(\mu < 59,593\) (state employees earn less than federal employees)

Step 2: Calculate the test statistic.

To calculate the test statistic, we can use the formula for the z-test for the mean:

\[ z = \frac{\bar{x} - \mu_0}{\frac{s}{\sqrt{n}}} \]

Substituting in the values:

  • \(\bar{x} = 58,800\)
  • \(\mu_0 = 59,593\)
  • \(s = 1,500\)
  • \(n = 30\)

\[ z = \frac{58,800 - 59,593}{\frac{1500}{\sqrt{30}}} \]

Step 3: Calculate the denominator.

\[ \frac{1500}{\sqrt{30}} \approx \frac{1500}{5.477} \approx 273.86 \]

Step 4: Calculate the z-value.

\[ z = \frac{58,800 - 59,593}{273.86} = \frac{-793}{273.86} \approx -2.895 \]

Step 5: Round to the nearest hundredths.

Rounding \(-2.895\) to the nearest hundredths gives:

\[ \boxed{-2.90} \]

The test statistic value is \(-2.90\).