Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 14, 1991 TAG: 9104130011
SECTION: BUSINESS PAGE: E-1 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
But it's a report that local folks may not find entirely flattering. It characterizes the region as an area where people are willing to work for relatively low wages.
An abundance of low-cost labor, an enviable quality of life and a strong work ethic are described in the study, distributed to executives whose companies may be a prospect for expansion.
The report is an economic development study, "Southwest Virginia Our People Mean Business," published by C&P Telephone Co. It covers a 17-county area west of Roanoke.
Lt. Gov. Don Beyer has sent 125 copies of the study to heads of Northern Virginia businesses with a record of growth. Other copies went to George Mason University for use in the partnership bridge between Northern Virginia and less developed areas of the state. Local and regional economic development organizations are sending the study to their prospects.
The study emphasizes the importance of low wages, an economic fact of life more attractive for employers than for employees. Office workers' wages are lower and will remain lower than other areas because of a lower cost of living and a favorable supply of labor, the study said.
The conclusion is that employers in nearby high-wage areas can cut their labor costs by one-third or more by moving to Southwest Virginia. Little pressure for wages to escalate is expected, the study said, because of the plentiful and growing labor supply.
David Picher, an economist for C&P's parent, Bell Atlantic, and manager for the study, said he sees this as companies saving money rather than underpaying workers. Picher ties the comments on wages to the cost of living.
From his Arlington office, he said, Southwest Virginia companies may pay $5 an hour and Northern Virginia firms $10 an hour. But housing is at least twice as expensive in Northern Virginia, he added.
Picher hopes the study will be useful to companies "thinking about how to cut costs" during the recession. Labor shortages in metropolitan areas have eased, removing some of the pressures "to come to labor-rich Southwest Virginia." But that's temporary, he added. If the companies are far-sighted, they'll go where labor is plentiful.
The study shows that office workers are paid less in the Southwest than in urban areas. Southwest Virginia office workers drew pay increases of about 2.5 percent a year between 1984 and 1989, lower than in nine other metropolitan areas from Richmond to Atlanta and Chicago, according to Bureau of Labor Statistics figures.
A Virginia Employment Commission report in the study lists 1,150 people who applied for jobs starting as low as $3.35 an hour at four Southwest Virginia companies. "Any concerns that workers will not turn out for jobs at the lower end of the pay scale can be put to rest" by the VEC figures, the study said.
Aeroquip Corp. in Wytheville has a philosophy of blending its pay scale into the local economy, Joseph Freeman, the plant manager, said. His plant's average wage last year was $8.03 an hour, compared with $9.50 to $10 in Charlotte.
American Research Corp. of Virginia in Radford finds it "much easier to get high-level people at good salaries here." Russell Churchill, president, said he's probably saving 10 percent to 15 percent in hiring Ph.D.s, compared with Northern Virginia.
Franklyn Moreno, marketing director of New River Economic Development Alliance, said the study's emphasis on low-cost wages is "the nature of the environment. It's not that we're promoting cheap labor." National unions' pay scales usually are based on the local cost of living, he said. Living costs in urban areas are higher than suburban communities, and they are even lower in rural areas.
Moreno said the C&P study should be useful in attracting back-office business operations, which can take calls and process orders in a lower living-cost community as well as in an expensive area.
Beth Doughty, research director for the Regional Partnership of Roanoke Valley, said the Southwest Virginia study "gets people's attention" with its message that "we have labor at lower cost in difficult times."
A "very high work ethic . . . an adequate supply of good entry-level people" was reported in the study by Davis Walker, industrial relations vice president at Litton Poly-Scientific Corp. in Blacksburg. "They'll give you a fair day's work for a fair day's wage. . . . You treat them fairly, and you'll get 110 percent out of them," Walker said.
by CNB