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More jobs available, but at lower wages

Employers are hiring again, but many salaries have stagnated or fallen in recent years and haven't kept up with the higher costs of fuel and food.

May 27, 2011|By Alana Semuels, Los Angeles Times
  • Tangela Ridgeway, a mother of three boys, scours newspaper help wanted listings. She lost her job as a front desk agent at a Hollywood hotel in December 2009. It paid $18.75 an hour. Now, she lives with siblings in Cerritos and says similar positions are listed at $14 an hour. "If it weren't for my family, we would be out on the streets," Ridgeway says.
Tangela Ridgeway, a mother of three boys, scours newspaper help wanted… (Gina Ferazzi, Los Angeles…)

Tangela Ridgeway agrees that the economy is improving. It's just the pay that's getting worse.

The 36-year-old mother of three used to make $18.75 an hour as a front desk agent at a Hollywood hotel. Now, she says, similar positions are listed at $14 an hour.

She's living with siblings in Cerritos, trying to save money as she watches prices rise for milk, cereal, eggs and gas. She worries that she's going to need two full-time jobs to make ends meet, but would settle for one, even if it pays less. She knows it's an employer's market.

"They know so many people want it," she said. "They're going to get someone to do the job."

Employers are hiring again, with solid payroll gains in the nation and California during the first three months of the year. But workers are getting by on less money than they did just a few years ago, government data show, because employers are keeping a tight rein on salaries and because costs of fuel and food have risen sharply.

National pay figures on rank-and-file workers, who hold 80% of nongovernmental jobs, show a steady rise in earnings from the mid-1990s through 2008 — and then a significant drop the past two years. In April, average hourly earnings for production and non-supervisory employees was $8.76 an hour when adjusted for inflation, down from $8.93 two years ago.

In California, private-sector employees saw an average 2% increase in pay from April 2010 to April 2011 — but those gains are not adjusted for the cost of goods and services, which rose 3% during the period.

And in some regions, wages have fallen sharply. In the Inland Empire, which includes Riverside and San Bernardino counties, wages for private workers plunged 9% from their peak in April 2008, to $21.53 an hour in April 2011.

Labor experts say workers have little leverage with unemployment at 9% nationally and 11.9% in California, because there is almost always competition for every open position.

"Workers have no bargaining power at all when unemployment is this high," said former Labor Secretary Robert Reich, now a professor at UC Berkeley.

Stagnant or falling wages jeopardize the fragile recovery, Reich said. When workers bring home less money, they spend less — especially because they're now putting more cash into savings in the wake of the financial crisis. Consumer spending accounts for 70% of the country's gross domestic product and helps generate jobs in retail, transportation and manufacturing.

Companies, meanwhile, say that keeping a lid on compensation is a key to staying in business.

HVH Transportation Inc., a Denver trucking company, is hiring owner-operators, offering 87.5 cents per mile, plus $30 per stop. In 2009, the same position paid 92 cents a mile and $45 per stop.

"We had to lower our rates for drivers because of the economy," said Jackie Dunlap, a human resources representative. The company isn't making as much money, she said, so it had to cut back on pay.

Workers with less education or those in low-paying sectors such as retailing are taking the brunt of the wage deflation, government figures show.

Retail has traditionally been an escape valve for people who have lost better-paying jobs in construction, manufacturing or other sectors, and it was flooded with job seekers during the recession.

That has allowed employers to keep payroll costs down. Retail workers, for example, averaged $7.57 an hour in April 2006, government figures show. As of last month, the average was $7.02.

Technology is also making it easier for companies to thin their ranks of clerical and administrative workers. Firms are letting more managers and executives handle their own phone calls, scheduling and emails — eliminating administrative assistant jobs that used to pay about $60,000 a year, said Angie Cooper, director of workforce development for Jewish Vocational Services in Marina del Rey.

If companies staff these positions at all, she said, they tend to do so with lower-paid hourly workers.

"I'm seeing more and more $8-an-hour jobs, whereas I thought they had disappeared," Cooper said.

Also driving the trend is the reduced power of unions, many of which have been forced to accept two-tier systems that mean less pay and benefits for new hires. At Ford, for example, newly hired UAW workers get $15.52 an hour, down from the $29 an hour longtime workers are paid.

"The very bad labor market would be enough to freeze wages on its own, but now unions are under siege and workers may be willing to take contracts that aren't as good," said Heidi Shierholz, an Economic Policy Institute economist.

The number of workers belonging to unions fell 4% from 2009 to 2010.

In addition to lower salaries, many new jobs lack benefits, meaning workers' total compensation is lower. Other jobs are less stable contract positions.

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