The Tribune Democrat, Johnstown, PA

Business

January 12, 2013

Local wage growth weak

— Are you a 40-something in a skilled profession who has held fast to your job the past several years without even thinking of asking for a raise?

Or are you a skilled craftsman that became unemployed for a prolonged period and finally was forced to accept a position that pays nearly one-third less than your previous salary?

If so, there are several reasons that you may not be seeing more “fruits of your labor.”

A number of factors are responsible for this weak growth pattern as measured by year-to-year changes in annual average earnings in the Johns­town labor market area.

These include the duration of the recession and the slow recovery. Employers’ attempts to reduce costs have caused pay cuts and wage freezes to remain fixtures in the job market, while industry restructuring and an imbalance between supply and demand continue to drive much of this change.

Increased costs to employers for such things as health care benefits continues to be a factor. Also, lower wages also may have been fueled by growth in low-wage occupations that to some extent have driven job gains locally.

Shawn Kaufman, human resources director of Riggs Industries Inc. of Boswell, which employs several hundred people in a variety of industries, points to the need for wage changes so that employers can keep pace with the competition in attracting qualified workers.

Kaufman said that it is looked at as a package that “covers both wages and benefits such as health care.

“It is a situation where both are important to the workers, yet the costs are significant,” he said.

Stagnating wages have had a ripple effect on various segments of the working population. Included in this group are new hires, who are particularly apt to settle for lower paying jobs than they expected, and college grads, who are often accepting positions in areas outside their field of study.

Workers in industries severely impacted by the recession were also hard hit. For example, construction did particularly poorly during the recession because of the housing bust, and workers within the industry were very likely to see no wage change or even a reduction in pay.

Some have attributed the stuck wages to the above average unemployment rate in this area (8.5 percent ), which has created a more competitive environment for many different job-seekers. These would include the underemployed and those working part-time or temporary jobs, who are eager to snap up full-time jobs that come available at nearly any wage.

Wage pressure also has fallen on the long-term unemployed, who find returning to the workforce could mean new jobs at lower pay. Compared with previous recessions, the higher proportion of long-term unemployed (those unemployed for 27 weeks or longer) in the post-recession period has reached record highs.

Dennis O’Leary, administrator of Cambria County CareerLink, said that “many workers who have lost their jobs are challenged in accepting lower-paying jobs. It is truly a very difficult financial adjustment for these people.”

The local economy may be slowly returning to normal, but wages will likely take a bit longer to recover. The annual pay raise, something workers once could count on, has become a lot more questionable in the aftermath of the great recession, while average wage increases are failing to keep pace with inflation.

Reductions in the growth of wages and salaries typically begin during recessions and continue well into the post-recession recovery. This is particularly true locally as wages grew by slightly more than 2 percent during this time. That is the weakest annual increase since the recession of the early 2000s.

While much of the emphasis during this recovery period has been on jobs, it is important that we recognize and understand the wage issues that many local employers and workers continue to deal with on a daily basis.

For 40 years, Bill Findley was employed by the state Department of Labor and Industry Center for Workforce Information and Analysis as a workforce information specialist, monitoring and reporting on labor market developments in this area and across the region. He is a graduate of Pitt with a bachelor’s degree in business administration.

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