Friday, Aug 22, 2014
Local News

Wages not keeping up with cost of living


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SEBRING - When was the last time U.S. workers got a raise as the economy tumbled, then slowly tried to sputter back on?

It depends on who you ask.

According to the U.S. Department of Labor, "real" average hourly earnings, or wages adjusted for inflation, rose 0.6 percent from December 2012 to December 2013. Combined with a 0.3 percent decrease in the average work week, the earnings rose 0.4 percent, the government says.

But four years into the economic recovery, U.S. workers' pay is not even keeping up with inflation, the Wall Street Journal reports in an August 2013 story.

The average hourly pay for a nongovernment, non-supervisory worker, adjusted for price increases, declined to $8.77 in July from $8.85 at the end of the recession in June 2009, labor department data show.

"Stagnant wages erode the spending power of consumers. That means it is harder for them to make purchases ranging from refrigerators to restaurant meals that account for most of the nation's economic growth," the report concludes.

While experts, economists and political pundits differ on why wages are not rising - from automation to the Affordable Care Act - some studies point out a worrying trend: The economic recovery has created jobs but middle class jobs are being squeezed out and replaced largely by low-wage employment.

Middle class workers are being squeezed out due to technology and the leveling of the global economic landscape - aka outsourcing, states an April 2012 Federal Reserve Bank of San Francisco study.

Institutional and cultural factors have "reinforced rather than offset market factors," the study adds. Some of these include negative attitudes toward unions that are chipping away at bargaining rights, rising costs of higher education that is becoming increasingly crucial in this new economy, and the phenomenon of bonus pay.

According to a 2012 National Employment Law Project report, three low-wage industries have added 1.7 million jobs in the recovery, making up 43 percent of total net growth: food services, retail, administrative, support and waste management services.

Seventy-six percent of the growth in these industries occurred in their lower-wage occupations, the report states.

"Key mid-wage and high-wage industries are either not growing, or not growing enough to make up for recession losses," the report concludes. Steep losses in construction; finance, insurance and real-estate; and manufacturing being examples of a large gap in job creation.

Here in Highlands County, the average annual wage in Highlands County has increased "dramatically" over a 10-year period, said Heartland Workforce President and CEO Donna Doubleday.

In 2002, the average annual wage was $23,211; the latest available data for 2012 places it at $29,617.

"This is an increase of 21.63 percent over the span of 10 years," she said. Doubleday attributed minimum wage and cost-of-living increases, as well as increased need for occupational professionals such as in healthcare, as some reasons. In addition, the average monthly employment rose from 24,976 in 2002 to 27,410 in 2012, a 9.7 percent increase, although it remains seasonally driven, she added.

Some local professionals who get salary raises this year are teachers and administrators rated "effective" and "highly effective" in their evaluations as part of a governor-funded mandate.

"We are very happy we were able to get raises for our teachers and administrators," said Highlands County School District Human Resources Director Vivian Waldron.

"It's been a while since they've had this significant a rise," she said, adding school district staff worked "very hard" to help usher in the Common Core Standards.

While the evaluations decided the dollar amount of the raises, teachers with annual contracts (those without tenure) got a dollar more an hour, Waldron explained.

Some additional pay raises also were given as part of the STEP program, which is in its last year, and the starting salary of a new teacher has been bumped up from $34,000 to $35,000, she said.

Some other local public entities have not had the budget flexibility as the school district, which was able to fund the salary increases through state money.

The last time the Highlands County Board of County Commissioner could give its 346 budgeted positions, some of which remain unfilled, cost-of-living increases was October 2008.

As the county eyes a projected $9 million shortfall, as of December, commissioners will discuss the feasibility of giving raises, as they do during budget sessions in the summer every year, but whether they can actually make them happen depends on the financial situation. County Commissioner Don Elwell said as much as he would like to do that, the commission's main obligation is to balance the budget.

While cost-of-living increases were considered the norm until a few years ago, a standard COLA may not be enough when workers are not making enough to get by.

This January, minimum wage workers in Florida got a 14-cent bump in their wages, making their hourly pay eight cents less than $8 an hour.

The raise in wages is part of a voter-passed state amendment that grouped pay to the consumer price index, essentially increasing the wage rate in proportion to what the government calculates as an increase in the cost of living for the year.

The nominal jump is far from what Highlands County residents really need to live, according to the Living Wage Calculator.

That hourly pay is a dollar less what one adult in Highlands County working full time must really earn to support himself or herself, and almost $10 less than what a sole provider with a child needs to live by, states the online calculator developed along with the Living Wage Project.

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