Well-Paid Benefit Most As Economy Flourishes
Monday, July 10, 2006
Wages are rising more than twice as fast for highly paid workers in the Washington area as they are for low-paid workers, an analysis of federal data by The Washington Post shows.
That means the spoils of the region's economic expansion are going disproportionately to workers who are already well-paid, widening a gap between rich and poor in a place where it is already wider than in most of the country.
Businesspeople cite shifts in the world economy that give educated workers leverage to negotiate for higher wages but make low-paid workers replaceable -- a disparity that is especially pronounced in a service economy like Washington's.
The region's economy is strong and businesses are expanding, hiring more software engineers, financial analysts, salespeople and other skilled workers, thus bidding up their pay. But companies are simultaneously finding ways to automate clerical tasks, move call centers to cheaper places and handle business online, weakening demand for less-skilled workers.
Consider Focuspoint Inc., a company in Manassas that sells recorded messages for companies to play when callers are on hold. Three years ago, two order clerks frantically juggled calls and faxes from several hundred clients placing orders. Now the company has 1,700 clients and is expanding its sales and other high-level staff but still has just those two clerks -- who now sit quietly overseeing Internet orders.
"Three years ago, we would have had to hire more people to handle all our new clients," said Joe Martin, a vice president. "Now, we rely on new technology to pick up that work."
Such innovations help explain why, from 2003 to 2005, the average wage for people in the lowest pay bracket, with salaries around $20,000, rose only 5.4 percent in the Washington region -- not enough to keep up with rising prices. For the jobs that pay around $60,000, salaries rose 12.4 percent, well ahead of the 6.8 percent inflation in that period.
Those numbers come from a Post analysis of federal data collected from employers. The disparity exists throughout the nation, but the gap between high- and low-paid workers is widening faster in Washington than in the country as a whole.
"I'm not the kind of person to say I'm not getting paid enough," said Kamal Quarles, 27, of Oxon Hill, who handles packages for a large shipping company -- a function that is rapidly becoming automated. He said he is earning 4 percent more than he did when he started four years ago. "The reality is my pay isn't rising, but everything else is."
In the highest wage bracket, where chief executives, lawyers and other professionals earn six figures, average wages rose 8.5 percent from 2003 to 2005. The increase in their incomes is probably even higher, because employees at that level also often get better benefits, partnership income, stock options or other compensation.
Nationwide, the wage gap is widening more slowly: The average wage for upper-middle-income jobs rose 5.8 percent, and low-wage jobs saw pay increases of 3.4 percent, from 2003 to 2005.
These figures are based on data from a twice-yearly survey, overseen by the U.S. Labor Department, of 200,000 employers across the United States. For this analysis, The Post divided the 2.7 million jobs in this region into five brackets based on the jobs' average pay, comparing changes in each bracket over two years. (See accompanying story for details.)