ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 28, 1996 TAG: 9601260003
SECTION: ECONOMY PAGE: 4 EDITION: METRO
SOURCE: MEGAN SCHNABEL STAFF WRITER
To the decades-old designations of blue-collar workers and white-collar workers, Americans today can add another category: frayed-collar workers.
These employees, who may hold prestigious positions in highly profitable companies, nevertheless have found themselves battling to make ends meet as inflation has outstripped wage and salary increases over the last decade.
According to Mary Houska, a labor economist and retired Hollins College professor, Americans ages 25 to 40 likely will never enjoy the same standard of living as their parents did. In fact, the economic circumstances of this age group are some 35 percent worse than were those of their parents, she said.
Part of the problem, she said, is corporate America's increasing reliance on part-time labor.
"There are a lot of reasons for avoiding full-time workers," she said. The main one: the price of health care. Employers don't have to pay for part-time employees' health insurance, a tremendous savings in today's economy.
Many employers also have begun hiring workers through temporary services agencies, Houska said. In addition to eliminating the need to provide benefits, the nature of such temporary hires also leaves employers free to dismiss workers without the fear of costly and embarrassing lawsuits, she said, even in today's litigious environment.
The incentives for American companies to cut costs reach beyond national borders, said John Knapp, an economist at the Weldon Cooper Center for Public Service at the University of Virginia.
The emergence of the United States in the international marketplace over the last 15 to 20 years has contributed to stagnant American wages, Knapp said.
"It's become a much more market-driven economy," he said. As long as U.S. industry must compete with foreign manufacturers who pay their workers just a few cents an hour, American companies will resist further pay increases.
Houska agreed.
"As an economist, I can see that this continues to push us toward greater efficiency," she said. "And that's good."
But the movement toward greater efficiency may backfire, she said. Lowering wages may increase profits, she said, but only in the short run. Workers - who buy the bulk of U.S.-made goods - will have to cut back on their own spending to make up for the lack of wage increases.
Not every American worker is feeling the pinch, Houska said. Top corporate executives are being paid far better than ever before, she said, often as a reward for lowering companywide labor costs. And they may see additional benefits as company stock - which is often included in managers' pension plans - increases in value with the company's profit level.
Labor unions are often too weak to negotiate similar wage increases for lower-level workers, Houska said.
"This has not been happening over the short term," she said. "We're just now beginning to notice it." Between 1973 and 1985, the price of labor already had begun to drop, and baby boomers were still entering the job market. Add to this the increasing international competition, the weakening of unions and the recession of the early 1990s, she said, and the equation for low wages is complete.
"During the Great Depression, everybody was in the same boat, or almost the same boat," Houska said. It was, of course, a rotten little boat to be stranded in, but everyone faced the sharks together.
Today, that sense of presenting a unified front is gone, she said. If someone can't find a decent job, or has a job but can't quite make ends meet, he feels alone in his problem, especially as he sees his company pulling in substantial profits.
Houska doesn't expect much to change in 1996. No one she has talked to - with the possible exception of a few top-level executives - is confident about his job, she said. Workers today, even those in middle to upper management, don't always know whether their jobs will still exist next month, she said.
"It's not optimistic," she said.
THE FRAYED-COLLAR WORKER
Hourly pay, when adjusted for inflation, has remained the same or declined over the last six years for all but the top 20 percent of male workers and the top 30 percent of female workers.
The median hourly wage of male workers declined 1 percent per year from 1989 through 1994.
Average wages increased in that period from $13.06 an hour to $13.12, but the amount that businesses spend on wages and benefits for the average worker fell last year from $18.43 to $18.38 an hour. This was the first time the figure has declined since the Labor Department began computing it in 1987.
The real value of the minimum wage is 27 percent lower today than it was in 1979.
Median household income fell by 6 percent in inflation-adjusted terms between 1989 and 1992, after rising by 10 percent between 1983 and 1989.
Source: U.S. Department of Labor, Bureau of the Census, Economic Policy Institute
LENGTH: Medium: 99 lines ILLUSTRATION: GRAPHIC: Charts. 1. Workers in Virginia. 2. Workers inby CNBVirginia.