For workers holding out hopes of bigger paychecks on this Labor Day, economic reports offer a splash of cold water in the face.
They show that wages have barely kept pace with inflation since the 2001 recession, and a slowing economy could cap future pay gains just as the labor market was beginning to tighten.
Russ Nipper, a mall shuttle driver with the Regional Transportation District in Denver, said he makes $55,000 a year, up from $53,000 last year.
Transit workers received a 3.5 percent pay raise this year, he said. Higher health care premiums passed on by RTD ate up about half that raise before inflation took its bite.
“The economic expansion that began in late 2001 continues to bypass most working families,” said Jared Bernstein, an economist with the Economic Policy Institute.
From 1995 to 2000, median wages rose 11.3 percent for college-educated workers and 5.8 percent for workers with only a high-school education, after accounting for inflation, according to “The State of Working America,” a report from the EPI.
Over the next five years, the story was much different. Accounting for inflation, college-educated workers saw wages rise 1.3 percent between 2000 and 2005, 1.4 percent for high-school-educated workers.
The percentage of workers with health insurance and pension coverage also declined. And more of the same is expected to follow.
“In coming months, loosening labor-market conditions will put a lid on wages and help contain inflation, but ordinary workers will pay a heavy toll in declining real income,” predicts Peter Morici, an economist at the University of Maryland. “Inflation will continue to outpace wages for many workers.”
Inflation – 3.8 percent in the metro area in the first half of the year – is biting into the wage gains that workers do enjoy. The typical American household has lost $3,000 in earning power after adjusting for inflation the past five years, he said.
Of course, not all workers are just treading water. Health care workers, accountants and corporate executives in particular have enjoyed strong pay gains. Uyen Pavelis, a senior auditor with Ryan, Gunsauls & O’Donnel in Denver, saw her pay jump from $60,000 to more than $70,000 in less than two years. She probably could make more if she didn’t prefer a flexible work schedule.
After corporate accounting scandals, Congress passed stricter financial reporting rules, boosting the demand for public accountants. Pavelis finds herself among a small number of workers whose salaries are climbing rapidly while most others languish.
Labor shortages are confined to a small number of professions, said Joseph Winter, a senior labor economist with the Colorado Department of Labor and Employment. He said they remain the exception rather than the rule.
“We still have a strong cadre of well-educated people who are not fully absorbed into payrolls,” he said.
iStaff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
$79,200
Steven Martinez
Position: Master gunnery sergeant, recruiter trainer, U.S. Marines
2005 pay: $74,400
Are you happy with your raise? “I’m happy with my pay raise. I’m excited about being able to retire in two years. I’m looking forward to the second phase of my career.”
First job: Foot Locker shoe salesman in Texas, $3.35 an hour.
$60,000
Patty Stewart
Position: Registered nurse, Medical Center of Aurora South
2005 pay: $80,000
Are you happy with your pay raise? “I took a cut in pay when changing hospitals.”
First job: Nurse in Pennsylvania, $15 an hour.
$102,690
John Hickenlooper
Position: Mayor of Denver
Pay raise: At the outset of his term, Hickenlooper took a voluntary 25 percent cut in the $136,920 annual mayor’s salary, returning the difference to the general fund.
First job: Mowing lawns in Philadelphia area, $2.50 an hour
$64,000
Mitch Ackerman
Position:Union president, Service Employees International Union Local 105
2005 pay: $61,000
Are you happy with your raise? “Yes. I think I am probably one of the lowest-paid leaders of a union my size anywhere, but it is more important for me to have more staff in the union than it is to make more money.”
First job: Costume jewelry packer in Long Island, $5 an hour.
$55,000
Russ Nipper
Position: 16th Street Mall shuttle bus driver, Regional Transportation District.
2005 pay: $53,000
Are you happy with your raise? “We got a raise, but a month later our health care costs went up and ate up half
of it.”
First job: Luggage assembler at Samsonite, $1.65 an hour.
$70,000
Uyen Pavelis
Position: Senior auditor, Ryan, Gunsauls & O’Donnell
2005 pay: $66,000
Are you happy with your raise? “I was happy with my raise. I love being an auditor. I don’t understand why there aren’t more auditors. We are in high demand right now.”
First job: Staff auditor, $33,000 a year.
