Work force has changed since first Labor Day

Sunday, September 4, 2005

The U.S. work force has undergone a serious facelift since New Yorkers staged the nation's first Labor Day parade 123 years ago, complete with German singers, Irish fiddlers, union bands and fireworks: Labor Day hasn't been about organized labor since long before the Service Employees International Union, Teamsters and United Food and Commercial Workers and their 4 million members broke from the 50-union AFL-CIO this summer.

The three unions departed over complaints the AFL-CIO failed to cultivate members among 40 million white-collar and service workers whose jobs won't flee overseas. It leaves federation ranks filled with public-sector employees, not traditional assembly-line workers, at a time when just 8 percent of private-sector employees are unionized.

Jobs lost, jobs added

Traditional manufacturing has lost more than 4 million jobs since January 2000, even as the overall economy added more than 6 million jobs so far in the 21st century -- including 2.4 million the last year. That 152,000-a-month average job growth kept pace with growth of the work force since the employment market bottomed out after the 2001 recession.

But all is not lost in U.S. manufacturing, according to David Huether, chief economist for the National Association of Manufacturers. He cites reports of accelerating orders and production to foresee future gains in factory hiring above today's 14 million manufacturing employees.

Even before Hurricane Katrina sent oil prices spiking above $70 a barrel, workers saw gasoline costs soar 40 percent and other expenses claim a larger chunk of household income, which stayed steady at $44,400 the last three years.

Reaping the benefits?

Worker pay and benefits rose a scant 0.7 percent last quarter, the slowest pace in six years, even as rising energy costs pushed up consumer prices at a 3.3 percent pace. When inflation is taken into account, average hourly wages stood at $16.13 last quarter, almost what they were when the current recovery began in 2001.

Even so, Americans are working longer and harder for the money, losing the equivalent of a paid holiday the last 15 years, and they're still at it even though productivity has slowed from a blistering 8 percent-plus pace early in this economic expansion.

Wages also are giving way to higher benefit costs.

"In many ways, benefits have replaced salary as the No. 1 consideration of employees when deciding to change jobs," Janemarie Mulvey concludes in her "American Workplace 2005" report for the Employment Policy Foundation, the conservative Washington think tank she heads.

Consider that premiums for employer-provided health insurance mushroomed 59 percent since 2000, "far outstripping wage gains," according to National Bureau of Economic Research analysts Katherine Baicker and Amitabh Chandra.

"For workers who continue to get health insurance, more and more often the increased price of premiums is coming out of their salary: A 10 percent increase in premiums is offset by a 2.3 percent decrease in wages," the two find.

Besides health coverage, Mulvey also cites rising pension costs brought on by the three-year bear stock market and administrative overhead. The upshot: Traditional pension plans have shrunk to 20 percent of the work force, with 401(k) accounts and other defined-contribution plans that were all but nonexistent 25 years ago exploding to cover 40 percent of workers.

As of Sept. 1, it's been eight years since the federal minimum wage last increased, to $5.15 an hour. Economist Isaac Shapiro of the Center on Budget and Policy Priorities, a liberal Washington think tank, said the purchasing power of the minimum wage has sunk 17 percent in the years since and is at the lowest percentage of today's $16 average hourly wage of non-supervisory employees since 1949.

Put another way, United for a Fair Economy, a Boston group that charts corporate executive pay, says the minimum wage would be $23.03 an hour today had it kept pace the last 25 years with the hike in CEO pay, which spiked last year to $11.8 million on average, or 431 times the average worker's paycheck.

According to the U.S. Labor Department, 85 percent of American jobs in the 21st century will demand more than a high-school education, including advanced training, an associate's degree or a four-year-college diploma.

As manufacturers association chief John Engler warned in releasing NAM's Labor Day report warning of a 21st-century skills shortage, "Tomorrow's jobs will go to those with education in science, engineering and math and to those with high-skill technical training." Employers already pay a premium to college grads, according to an Employment Policy Foundation study that also predicts the best-paid jobs by 2012 will be management, the professions, computers, skilled trades and teaching.

For most working families, you are where you live when it comes to payback for your labors. A new "Basic Family Budgets" report from the Economic Policy Institute, a liberal Washington think tank backed by business and labor groups, lets you compute basic living expenses in more than 400 communities nationwide. It finds that two adults and two children face the cheapest basic family budget in rural Nebraska at $31,080 a year. Boston is the most expensive, at $64,656, for that same family of four.

On the Net: The family budget calculator for six family sizes in more than 400 communities is online at

Where you live determines how far you must stretch your paycheck this Labor Day: Even in the same state and metropolitan area, costs can vary widely for making ends meet.

A new "Basic Family Budget" calculator on the Web site lets workers see how they stack up against the Joneses and everyone else by charting more than 400 cities by family size and expenses for housing, shelter, child care and the rest, says analyst Silvia Allegretto, who devised the online calculator for the Economic Policy Institute, a Washington think tank.

For instance, according to the calculator, it takes $39,648 a year for a single parent to raise two children in Birmingham, Ala., including $577 for housing and $1,047 for child care each month. That same parent, living in Ventura County, Calif., would need $10,000 more a year, or $49,392, to cover $1,382 for housing and $892 for child care each month. Alternately, a single parent of two from Albuquerque, N.M., needs $35,436 a year, including $699 for housing and $869 for child care each month.

Family budgets also vary widely within states and metropolitan areas: The typical two-parent, one-child family's cheapest budget is $33,360 a year on Florida's Treasure Coast (including $686 for housing and $424 for child care a month). compared to $37,212 across the state in Naples ($837 for housing and $424 for child care a month).

In Tennessee, that same family would need $30,156 in Knoxville (including $553 for housing and $441 for child care a month) and $31,224 in Memphis ($662 for housing $441 for child care).

And basic family budgets run $2,000 more in Boulder, Colo., than in Denver. A Boulder family of two parents and two children gets by on the cheap for $49,608 a year, including monthly costs of $1,022 for housing and $1,001 for child care. In nearby Denver, that same family would spend $47,520 a year, including $888 for housing and $1001 for child care each month.

That same family of four would need $44,892 a year in Cincinnati, including $652 a month for housing and $1,111 for child care. Move to the Kentucky suburbs and the same family's budget is $39,216 a year, including $652 a month for housing and $764 for child care.

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