Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 1, 1993 TAG: 9301010097
SECTION: BUSINESS PAGE: A-5 EDITION: HOLIDAY
SOURCE: Knight-Ridder/Tribune
DATELINE: CHICAGO LENGTH: Medium
SALARIES STAGNANT IN '92
American workers will recall 1992 as the year salaries inched up by record low amounts. And 1993 promises little relief from miserly increases.Private workers' salaries grew by 2.7 percent for the 12 months ended in September, the latest available statistics. That was the smallest increase since the Labor Department began tracking such statistics in 1975.
That means many workers' pay increases failed to keep pace with inflation, which was just above 3 percent in 1992.
While the salary pinch touched a broad swath of workers, from executives down, it hurt some more than others.
White-collar sales workers saw wages climb 1.4 percent. Workers in retail trade and banking got 2.1 percent increases. And construction workers' salaries' grew 2.3 percent, according to new Labor Department statistics.
This is not a new trend. Workers' salaries barely grew in the 1980s. The trend is unlikely to end soon, as companies warily cut costs and struggle to regain their footing from the recession before increasing payroll expenses.
The decline in wage increases in 1992, which represents a 40 percent decrease compared with pay increases in 1989, clearly emphasizes the problem of stagnant wages for workers and the U.S. economy.
For workers, whose wages have grown 1.3 percent since 1982 when adjusted for inflation, the latest figures confirm that they are less likely than before to boost their wages and climb the economic ladder.
The problem may be bigger than the government's figures indicate, suggested Larry Mishell, an economist with the Economic Policy Institute, an independent think tank in Washington.
The government ignores that many workers have slipped into lower-paying jobs, he said. Taking that into the calculation of workers' original base salaries could mean reducing the nation's annual wage growth by up to 1 percentage point, Mishell said.
Still, experts say, most companies have little trouble getting workers to accept smaller salary increases.
"People are probably more accepting of these small raises than any other time in years. They are looking at the alternatives - pay freezes, pay cuts or layoffs - and they are not very palatable," said Don Hay, a Chicago-based consultant with Towers Perrin, a management consulting firm.
Most management experts say corporate America's pay increases next year will mirror raises handed out in 1992 - raises that were widely considered the lowest in a decade.
Some of their findings, based on corporate surveys, include the following:
An increasing number of companies intend to use pay freezes. About 9 percent of firms surveyed by Towers Perrin this year expected to hold back wage increases, three times as many as in 1990. In many cases, however, the pay freezes are short term.
To make up for overall slow wage growth, a growing number of firms are using alternative pay programs geared to workers' productivity or other incentive-related measurements.
Fearing a slower-than-expected economic recovery and long-term troubles, a small number of firms also are revising downward pay increases for the coming year.
Some changes carry long-term significance for workers' salaries.
"For the first time we are now seeing midlevel managers and clerical workers receiving salary increases at almost the same level," said Ken Abosch, a wage expert for Hewitt Associates, a management consulting firm in suburban Lincolnshire, Ill.
"This is a flattening effect that has not been seen previously," he said.
Midlevel managers are likely to receive raises of up to 4.6 percent, and clerical workers are expected to get raises of up to 4.5 percent in 1993, Hewitt's surveys show. Those are the same raises both groups received this year, when they were the lowest since 1983, according to Hewitt Associates.
Executives, whose pay increases dipped to a 10-year-low of 4.7 percent this year, are likely to receive raises of up to 4.8 percent in 1993, the company reported.
By comparison, union members' salary increases are expected to fall from 3.6 percent this year to 3.5 percent in 1993, according to Hewitt.
The unprecedented slowdown in wage increases for white-collar workers is a trend that began in 1989 and has taken hold, said Lawrence Katz, an economics professor at Harvard University.
"This is very worrisome," he said. "This was the one bright spot of the economy, where the ability to gain an education meant you could move up. But even now things have not worked out well in those jobs."
If the U.S. economy continues to improve, as is widely expected, most experts say companies are not likely to reward workers with higher pay increases. That is a result, they say, of firms' conservatism and their desire to see profits increase before boosting expenses.
It also reflects many firms' thinking that they must cut costs and trim workers to stay competitive.