If you didn't get a raise in the past year, there's something wrong. Wages in Los Angeles County rose across the board in the last year, according to the third annual salary survey prepared for the Business Journal by the Economic Research Institute in Redmond, Wash.
None of the more than 100 occupations surveyed suffered a cut in pay, and more than 15 percent of the jobs got raises of 10 percent or more. Like last year, the highest-paid workers were those in the health care sector, but the biggest jump in wages was across a range of fields. Not all the news is rosy, however. The lowest-paying jobs hovered around the poverty level, and about 10 percent of the occupations received raises that failed to keep up with even the extremely low level of inflation that the nation enjoyed last year.
But taken as a whole, a local economy that continues to grow as jobless rates continue to fall translates into increased demand for workers and higher pay to lure them. "As long as unemployment is low and the labor market tight, it puts demand on employers," said Rajeev Dhawan, director of econometric forecasting at the UCLA Anderson Business Forecast. "If you drive down a street, it's hard to find any location that doesn't have a 'Help Wanted' sign," added Marv Dertien, an analyst at ERI.
The five highest-paid professions in L.A. are all in the medical field: neurosurgeons (with an average annual salary of $549,698), cardiologists ($285,501), hospital administrators ($262,678), orthodontists ($240,090), and psychiatrists ($219,394). But the biggest L.A. pay raises came in a variety of jobs: consultants (up 12.87 percent), hospital administrators (up 12.51 percent), computer software design managers (up 12.42 percent), securities brokers (up 12.34 percent) and pharmacists (up 11.98 percent). "Not surprisingly, it is people with higher education who seem to be the ones with the most growth in wages, pharmacists included," said Joseph Magaddino, economics professor at Cal State Long Beach. "It makes the most sense. The concern is about the people at the other end of the spectrum, without the educational skills."
Those occupations include the lowest paid in the survey: fast-food workers ($14,935), farm workers ($18,973), bank tellers ($19,343), retail sales clerks ($19,533) and garment sewers ($20,231). Moreover, several of these professions also were among those that saw the smallest increase in wages: garment sewers (up 0.23 percent), retail sales clerks (up 0.43 percent), secretaries (up 0.72 percent), bilingual secretaries (up 0.74 percent) and bank tellers (up 1.15 percent). Even with inflation low consumer prices rose only 2.2 percent last year, according to the Department of Commerce those raises weren't enough to keep up with the cost of living.
Most workers keep pace While an overall average salary increase wasn't available for the 100 occupations surveyed, the median increase the point at which half the salary increases are above and half below was 6.36 percent, or more than enough to offset the impact of inflation for most workers. "If inflation is running close to 2.5 or 3 percent, and you're making 5 percent more than last year, then clearly you're doing all right," said UCLA's Dhawan. "But there's definitely some areas that didn't keep up with inflation." One area in which inflation is of little concern when it comes to compensation is the technology sector. Fueled by the astonishing growth of the Internet, high-tech jobs are in great demand, as evidenced not only by the salaries, but also by the year-on-year increases. Computer software designers saw their average annual salary jump 12.34 percent to $111,916, systems analysis directors got an 8.1 percent boost to $120,192, computer webmasters got a raise of 9.03 percent to $75,589, and computer programmers saw their salaries rise 11.82 percent to $56,585. "(High tech) is the hot segment of the market right now," Magaddino said. Those wages are even more impressive when the issue of equity is factored in. Many high-tech workers are compensated with stock options in addition to salary, even in the wake of last spring's roiling of prices in technology stocks. So those occupations (and others, particularly chief financial officers) likely enjoyed even greater increases in personal wealth than the survey shows. "Equity has become such a huge piece of compensation in the last two years," said Caroline W. Nahas, managing director for the Southern California operations of executive search firm Korn/Ferry International. "I would submit that hospital administrators may be higher (in salary), but I doubt they have as many equity opportunities as others."The moving factor
She points out that certain salaries have risen dramatically because of the increased tendency of workers to move from one company to another if given a better offer, the corollary to which is that retaining someone who looks to be jumping ship drives up wages as well. High-tech companies growing at tremendous rates of speed can't always afford to spend the time looking for someone more qualified, so they pay wages they would never dream of paying in a less-robust economy.
"The retention issue is causing people to raise compensation that's a little bit more of an artificial raise," Nahas said. The spring tech sell-off has contributed to an easing of this, but the floor has been raised so high over the past couple of years that wages will continue to be impressive, she added.
The big question, of course, is how long the era of low inflation and high wages in Los Angeles can continue. There are signs that the national economy is growing at a more moderate pace than in 1999, and inflation is growing at a 4.0 percent annualized rate through July of this year. But the most recent national trend shows job growth slowing while Los Angeles roars ahead. The U.S. unemployment rate rose last month (albeit slightly and from near a 30-year low) to 4.1 percent, while L.A. County's unemployment rate for June, the most recent month available, fell to its lowest level in 11 years, to 5.2 percent from 5.5 percent. Given that Southern California began its economic recovery later than most of the rest of the country, economists predict that it will take longer to slow down as well.
Asia's recently resurgent economy should expand the market for U.S. exports, helping the manufacturing base that accounts for 16 percent of L.A.'s 4 million jobs, not to mention the regional economy that depends on trade as a whole, said Magaddino, who directs the Cal State Long Beach Economic Forecast Project. He estimates that the number of jobs in L.A. County will grow by 2.5 percent in 2000 and 2.4 percent in 2001, after growing by only 1.6 percent last year. A number of those jobs, of course, will be in low-paying service areas, "which bodes well for workers who don't necessarily have high educational levels." "The L.A. economy still has a lot of slack," said UCLA's Dhawan. "Unemployment should fall below 5 percent, bringing wages up."
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