Number of jobs rises, but pay drops

June 5, 2011 at 12:00a.m.

Los Angeles Times

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 hotel until she lost her job in December 2009. Now, she says, similar positions are listed at $14 an hour.

She’s living with siblings in Cerritos, Calif., 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 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 percent 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 nonsupervisory employees was $8.76 an hour when adjusted for inflation, down from $8.93 two years ago.

Labor experts say workers have little leverage with unemployment at 9 percent nationally, 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, a professor at University of California-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 percent of the country’s gross-domestic product and helps generate jobs in retail, transportation and manufacturing.

Companies 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 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. Companies 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 work-force development for Jewish Vocational Services in Marina del Rey, Calif.

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 percent from 2009 to 2010.

In addition to lower salaries, many new jobs lack benefits, meaning workers’ total compensation is lower.