By H.J. CUMMINS
Minneapolis-St. Paul Star Tribune
August 30, 2006
An assortment of data the U.S. government collects indicates that productivity is up among U.S. workers, but wages are losing ground to inflation - especially among the better-educated.
Take Mark Kath, for example. At the ripe old age of 32, Kath longs for the gravy days he has only heard about.
In the eight years since graduating from St. John's University in Collegeville, Minn., Kath joined and left one insurance company, exhausted by workdays of 12 to 15 hours.
He moved to another insurer.
He left when promises of opportunities turned into an ultimatum to relocate to Nebraska. He believes he has landed in a secure job now - but then, he's only been there since November.
"I feel I have opportunities I wouldn't have without a degree," said Kath, of St. Paul, Minn. "I'm not completely negative about the job market, but there definitely are challenges that weren't there a decade ago, when it was impossible not to have a job when you graduated - at least that's what people tell me."
Some economists said other factors may be complicating the results. For example, the rising cost of benefits could be boosting total compensation if not take-home pay. Also, productivity gains made by technological advances, not harder work, deserve to be shared with investors and stockholders, they said.
But others blame weak job growth for an employment market still tight enough to intimidate workers from demanding raises. They also say not everyone shares the pain, that the top earners are showing real wage increases.
"Unfortunately, I think this seems to be the reality going forward," said William Spriggs, an economics professor at Howard University in Washington. "And I don't think we have the labor-market institutions in place to combat this new restructuring."
A variety of U.S. government numbers, collected and analyzed by the liberal Economic Policy Institute in Washington, put together this picture:
- Median family income rose 1.6 percent from 2001 to 2004, while productivity rose 11.7 percent.
- Real hourly wages - adjusted for inflation - dropped almost 1 percent for the bottom half of workers between 2003 and 2005, but rose about 1 percent for the top 5 percent.
- Real annual earnings for college graduates dropped 5.2 percent between 2000 and 2004; high-school graduates, on the other hand, saw a real gain of 1.6 percent.
These are numbers that some college-educated Minnesota professionals said ring true in their lives. In interviews, several said it feels continually harder to make ends meet. One professional woman said she has had a couple of nice, new titles to go with new duties in recent years, but no raises. A business consultant spoke of two raises in more than six years.
They think professionals, especially, get the message that it's unseemly to bring up cash.
From the employers' perspective, benefit costs are formidable, according to a new U.S. Chamber of Commerce survey. Benefits now account for 40 percent of the average pay package, with medical coverage at 12 percent, the survey showed. And the total has been going up about 1 percent a year.
Much of the income losses for the college-educated came with the dot-com downturn in 2001, Spriggs said.
"We haven't done very well in generating jobs, so the wages of everybody hurt by that recession haven't totally recovered," he said. "That's why I think they are showing a decoupling of productivity and wage gains."
In St. Paul, the Jobs Now Coalition advocacy group said one problem is an economy that's generating mostly low-paying jobs.
"It's a shameful lie that all you have to do is get more education and you will reap the benefits of this economy," executive director Kristine Jacobs said. "The fact is that getting more education does not create better jobs."
Spriggs thinks Americans may turn to public policy if they feel circumstances are unfair, just as several states have for the lowest-paid workers by passing higher minimum-wage rates than the federal minimum. "I don't know what the result will be for college-educated workers," he said, "but I suspect we may slowly gravitate toward some effort by people to regulate our way out of this."
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Scripps Howard News Service, http://www.shns.com
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