New jobs in the 90s pay well

October 17, 1994|By New York Times News Service

The notion that Americans are working more for less pay is firmly embedded in public rhetoric. And it's practically gospel that the growing American economy cannot deliver the higher pay that American workers want.

No doubt many Americans are losing ground economically. But in fact most of the 5.5 million jobs the economy has added in the last two and a half years are in occupations that pay more, not less, than the average, which is now about $15.50 an hour.

This year alone, 72 percent of the 2.5 million new jobs have been for managers, from the chief executive to the branch sales manager, and for professionals, from surgeons and nurses to software programmers, accountants and high school teachers. And despite its reputation for low wages, the service sector is adding most of the higher-wage jobs.

As a result, average hourly pay for all employees, adjusted for inflation, is slowly rising, government data show, not falling as so many politicians and commentators have been saying. Average hourly compensation, which includes health benefits, paid vacations, pensions and other benefits, is also rising, adjusted for inflation.

Indeed, average hourly pay has risen 2.5 percent in the early 1990s, about as much as it did throughout the entire 1980s.

"What's driving the average wage up is not so much an improvement for each individual worker but that the mix of jobs is improving," said David Wyss, an economist at DRI/McGraw-Hill, a forecasting firm in Lexington, Mass. That is, the number of higher-paying new jobs is rising faster than the number of lower-paying ones.

Other factors -- bigger bonuses for executives and record amounts of time-and-a-half overtime pay for factory workers -- are also helping to push up pay.

To be sure, progress on the pay front has been extremely modest compared with that of the palmy 1960s or even the troubled 1970s. Another recession could wipe out some of the gains, at least temporarily. And the increase in average pay conceals a decline in the pay of many workers, especially those with little education or experience.

Indeed, even as average hourly pay and average family income have been edging higher lately, there is evidence that hourly pay of at least the bottom half of the work force -- those at the midpoint or below -- continues to slip.

That may be one reason that median household income, as reported by the Census Bureau last week, has continued to stagnate after several years of economic recovery.

Labor Secretary Robert B. Reich, who is 4 feet 10 inches tall, likes to say by way of illustration that averaging his height with that of basketball star Shaquille O'Neale, who is 7 feet 1 inch, produces an average height of 6 feet. That, he argues, shows the limitations of using an average number at a time when the gap between high- and low-paid workers is widening sharply.

But the rising average shows that the economic pie for workers as a group is growing and that there are more good jobs to go around. And it suggests that millions of men and women -- in particular those with education and specialized skills -- are beginning to see benefits from the efficiency-minded reorganizations that have roiled Corporate America in the last few years.

This painful restructuring, which spread from the factory floor to the service sectors in the last recession, continues to disrupt the lives of millions of workers and provoke anxiety for many more.

But one result is that the average American worker now produces about 6 percent more an hour than at the beginning of the decade. Many economists are optimistic that productivity, which ultimately determines how fast wages can grow in real terms, will grow somewhat faster in the 1990's than in the 80's.

And the group that is reaping the immediate benefits, while hardly a majority of workers, is nonetheless a fairly big one. Managers and professionals now count for one in four workers. As a group, their number is double, 34 million against 17 million, that of the factory workers who are often cited as typical of workers.

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