If you thought your paycheck was buying less than it did before, you may be right on the mark.
Wages and benefits for civilian employees rose last year at less than the rate of inflation for the first time in almost a decade, according to figures released by the Labor Department yesterday.
Total compensation paid to civilian employees jumped 3.1 percent last year, while the costs of goods and services grew at 3.4 percent, according to the Labor Department. When inflation is considered, worker compensation fell 0.3 percent, marking the first decline since 1996.
"Wages are not going as far as they need to in meeting a family's basic consumption needs," said Jared Bernstein, an economist with the Economic Policy Institute. "Once you fill up the tank, pay for grocery, pay for child care, that paycheck is awfully squeezed."
Economists and experts partly attributed the lag in wages and benefits to higher health care costs and the increase in energy prices. Workers have paid double-digit increases in health care costs for several years. And Americans saw a 17.1 percent surge in energy costs last year as gasoline prices exceeded $3 per gallon for the first time.
Hourly wage workers, especially, are feeling the pinch as global competition intensifies and high-paying union jobs in areas such as manufacturing continue to decline, said Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business.
"It's working families or people who do the ordinary jobs who are hurting," Morici said.
Compensation with inflation factored in last declined in 1996 when it fell 0.4 percent. But there were signs it was coming: The Labor Department reported that inflation-adjusted compensation fell 1.5 percent for the 12 months that ended in September.
Workers' paychecks last year grew at the slowest rate since 1996, when wages and benefits paid rose 2.9 percent. In 2004, compensation rose by 3.7 percent.
Part of the reason that total compensation fell last year is the declining rate of growth for health insurance and pensions. Those items cost employers 4.5 percent more last year, compared with 6.9 percent in 2004.
After four conservative years of double-digit jumps, health premiums paid by employers peaked and rose by just 9.2 percent last year, according to a survey of employers by the Kaiser Family Foundation and the Health Research and Education Trust.
The survey also showed that employers have been saving by dropping coverage - only 60 percent of private employers offered coverage in 2005, down from 69 percent in 2000 - and by passing costs onto workers. For example, the survey found that the average deductible last year was $323, nearly double what it was five years earlier.
Without factoring in benefit costs, wages and salaries last year rose by 2.6 percent, a slight uptick from 2.4 percent in 2004.
"We've yet to achieve a job market where employers have to bid wages up in order to get and keep the workers they need," said Bernstein, the economist at the Economic Policy Institute. "It's a characteristic of a job market that's still somewhat slack."
hanah.cho@baltsun.com
Sun reporter Bill Salganik and wire services contributed to this article.
