Article

What People Earn

By Hannah Wallace November 30, 2007

Recent numbers on wages look like great news for employees and economic developers. The average wage in Sarasota County rose 5.1 percent annually during the real estate boom years of 2002-2006, and 3.9 percent in Manatee. The region’s wage averages—historically below the state and national mean—have begun to catch up and now hover roughly 5 percentage points below the state average, and 14 percent below the national average, closer than ever.

“Tight labor markets have done some wonders for working people,” says Bruce Nissen, a sociologist at Florida International University’s Center for Labor Research and Studies who produces an annual State of Working Florida Report.

But once you look below the surface, some trends come to light that raise doubts whether the wage picture really is so sunny.

Local economic development experts readily agree that the business boom of the past few years has increased pay. “Businesses have been competing with each other over qualified workers, and they have had to raise wages,” says Mary Helen Kress, executive director of the Suncoast Workforce Development Board. In addition, the state legislature raised the minimum wage, and the rising cost of housing increased the pressure on employers over the past few years to spend more on paychecks.

But the main benchmark generally used by observers—wage averages—may lead to overly optimistic conclusions.

“Reporters should stay away from averages,” says Richard Judy, CEO of Indianapolis-based consulting firm Workforce Associates Inc. and the author of a May 2007 study for the Suncoast Workforce Development Board. “They can be weighted too much by the top end.”

Looking at the median—or midpoint between the lowest and highest numbers—may give a clearer view. A chart of randomly picked occupations in Sarasota-Manatee (see page X) shows that while workers in almost all occupations enjoyed wage gains from 2001 to 2007, the median increase for most jobs—particularly the low-paying ones the bulk of Sarasota-Manatee workers have—was clearly below the annual average wage increases in Sarasota (5.1 percent) and Manatee (3.9 percent).

Take cashiers, of which there are nearly 10,000 in Sarasota-Manatee. According to State of Florida statistics, the supermarket clerks’ pay in the bi-county area grew by just 3.9 percent annually from 2001 to 2007. The annual raises for tens of thousands of other workers in this area have been even more meager. Office clerks and bank tellers saw raises of only 3.6 percent per year; carpenters 3.5 percent; waitresses 3.2 percent; landscapers and home health aides 2.1 percent; and customer service representatives a mere 1.8 percent.

The one exception in low-wage jobs is the case of retail salespeople. Maybe thanks to the recent discovery of Sarasota-Bradenton by national chains and subsequent competition for sales talents, median store clerk wages grew by 6.9 percent annually from 2001 to this year.

In mid-range and top-level occupations, the gains are more solid. Even here, however, the wage trends show big differences. They range from a sensational 13.5 percent-per-year paycheck boost for construction managers to a solid 7.3 percent for middle school teachers to a meager 3.1 percent for accountants, and even a 3.4 percent decline for personal financial advisors.

And then there is another bad-news statistic in Richard Judy’s survey. The biggest job growth in Sarasota-Manatee over the past five years has been in low-end positions that pay less than $10 per hour. The number of poverty-level jobs showed a net gain of 11.8 percent from 2002-2005. To make things worse, Sarasota-Manatee’s top-tier jobs (paying more than $30 per hour) actually saw a net loss of 11.3 percent in the same period. The bulk of jobs remain in the middle range, but they have only seen small gains.

“Unwelcome news,” Judy called the phenomenon in his State of the Workforce 2007 report. “The bottom line… is that during the first five years of this decade, the Suncoast saw an expansion of employment in lower-paying occupations and a contraction of jobs in higher paying occupations. That is the opposite of what would have been preferred.”

Judy says the fast growth of rock-bottom jobs seems to hint that the Suncoast is mimicking a national pattern: bifurcation of the labor market into a large group of working poor and another large group of well-off employees, with the poor part growing faster.

The trend seems to run counter the economic development strategy of Sarasota County, which emphasizes high “value-added” jobs.

Kathy Baylis of the Economic Development Corporation of Sarasota County seemed puzzled by the low-wage trend and cited a different statistic, according to which Sarasota County’s share of value-added jobs, highly sought after by economic developers, rose from 20 percent five years ago to 26 percent. She guessed that the drop in high-paying jobs might be related to the closing of corporate headquarters such as Tropicana’s.

Be that as it may, the economic winds have shifted. Real estate and construction, which comprise an estimated 20 percent of the local GDP, are in crisis, and this affects the entire regional economy. Job openings—both at the bottom and top—are rarer these days, and even municipal governments are laying off hundreds of employees.

Still, the Workforce Board’s Mary Helen Kress predicts that the era of fast wage increases isn’t entirely over because worker pay hasn’t caught up with housing costs.

“I think employers have to continue to raise the bar because of that,” Kress said. “We’re losing workers. And there are industries that are still looking to add to their payroll.”

But others are less optimistic. “We’re not going to see the same kind of growth in wages as we used to,” says Baylis. “Overall, the state has the same experience.”

Of course, there’s another way of closing the gap: falling housing prices.

“The relationship between incomes and housing cost is way out whack, and it just can’t go on,” says FIU sociologist Bruce Nissen. “The housing crunch is unfolding as we speak. There’s a standoff between seller and buyers, but eventually sellers will have to yield.”

Catching up is particularly challenging for Sarasota. Once cost of living is factored in, it becomes clear that most wage increases lag far behind local inflation. Housing costs are the biggest culprit, especially in Sarasota, which has seen the biggest property value rises. The median single-family home price in the bi-county area rose from $175,000 in 2002 to $375,000 at the peak of the boom in late 2005. It dropped back to the high $200s in the fall. Rising property taxes and insurance are big concerns, too.

Bottom line: While Sarasota’s average wage still lingers more than 14 percent below the national average, Sarasota’s cost of living is almost 7 percent above the national urban average.

This affordability gap has prompted many workers to vote with their feet and leave Sarasota for cheaper grounds, creating a first for an area whose economy has largely been based on serving a growing number of people. “Workers are choosing to leave,” says the EDC’s Baylis. “Instead of in-migration of thousands of workers, we now have out-migration of hundreds.”

However, Baylis predicts the emigration trend won’t last long. “We have a quality of life second to none,” she says. “We still have baby boomers moving here. I can’t imagine this is a long-term issue.”

Employer hopping pays.

Technical writer Connie Whitesell saw her salary go up from $35,000 in the late 1990s to $56,000 today. How did she do it?

For one, she has a sought-after expertise: writing paper and online help documents for technology companies. She also changed employers three times.

Whitesell began her tech career with Bradenton-based Decision Management International nearly a decade ago. DMI started her at $35,000 and after five years raised the salary to the $40s, plus stock options. After the company hit a rocky patch in 2001, Whitesell left but was quickly hired by Lakewood Ranch-based Edwards Systems Technology, which bumped her up to $50,000. After just a year, when GE Security took over EST, Whitesell was bumped up again to $56,000, plus profit sharing, more vacation days, 401K, and employer match for health insurance, life insurance and short-term disability.

“We get paid for extra hours when a deadline approaches,” says Whitesell. “I think it’s a very good deal.”

Feeling the construction pinch.

In the early ’80s in California, carpenter Jim Schroeder was used to $20 an hour union jobs with benefits, so he took a big hit in income when he decided to move his family to Sarasota where wages were $6 an hour with no benefits. Florida’s high cost of workman’s comp insurance was a key factor in keeping hourly rates down, so Schroeder became a self-employed subcontractor. After 23 years of establishing his reputation and keeping overhead low, he has mostly stayed busy, even during the current construction slowdown. Larger contractors are hurting, he knows, and have had to downsize and lower their bids. Many workers have left the area, and the pawn shops are full of construction tools. “I’m a one-man operation and I’ve been in business for a long time so I haven’t suffered so much,” he says. “I’m also fortunate to get health coverage through my wife’s job.”

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