“This LA Times article on pay is fascinating for a lot of reasons, but I am going to just focus on the Pasadena public high school teacher and nominal vs. real wages. The article says, “The past 5 years Californian’s wages increased 15% nominally, but adjusted for inflation 6% (real wages).” In other words, more than half the nominal pay increase, was not real because of inflation; which is fostered by The Federal Reserve, our central bank. They have a goal of 2% monetary inflation a year, but would prefer a little more than less…

…So, now let’s look at the Pasadena teacher. She made $25,000 when she started 30 years ago and today she makes $80,000. She’s complaining she is falling behind financially, but that 30 year pay change is a nominal increase of 220% or 3.95% a year, during a period when our government says inflation (CPI) averaged about 2.62% a year. In other words, based on the government’s inflation figures, she earned a real wage increase of 1.33% a year. In real terms, her teaching wage went from $25,000 to $37,200, an increase of 49%. That’s pretty massive, if right. In other words, she should be able to buy almost 50% more goods and services (the items in the CPI index), with her 2016 wage than she was able to when she started as a teacher 30 years ago. Do you believe that’s true or do you believe her? I believe her, so what’s wrong? First, the national CPI index has imbedded in it national costs and a national rent index, certainly not California home prices. But, maybe even the more important issue, is what Ron Paul discusses in his book “End the Fed” (Many libertarian, Nobel Laureate, and Austrian-school economists and financial experts have similar views.) and what I have discussed about Nixon fully taking us off the gold standard in 1971 (remember, since that time Gold has appreciated in dollar terms at over 8% a year). Ron Paul and others believe that the government’s inflation statistics are wrong and that the price of gold (in dollar terms) better reflects the real rate of monetary inflation. I think Mr. Paul and others who agree with him may be right. So let’s go back to our Pasadena teacher. Gold is $1,250 an ounce today, but 30 years ago it was $342 an ounce. In other words, Gold has appreciated 4.41% a year over that timeframe. So, if you assume Gold’s price change is a more accurate interpretation of the real inflation rate, our Pasadena school teacher’s 3.95% annual raise, lost 0.46% a year to annual monetary inflation (4.41%). So, her real wage actually declined from $25,000 in 1986 to $21,800 in 2016, a 13% decline in her ability to purchase goods and services. Doesn’t that seem more like it? If you agree, maybe it is time to “End the Fed” and put us back on a monetary system that is more fixed and stable than the present one. Today, the U.S. dollar is no longer backed by gold, as it had been from the Country’s founding until 1971. It’s backed only by the promise of our government. That’s called a “fiat” (by fiat of the government) currency.” Mike Perry, former Chairman and CEO, IndyMac Bank

http://www.latimes.com/business/la-fi-wage-growth-california-20160408-story.html

What’s your chance of a pay raise? In California, it depends on what you’re doing

unnamed (21)

Natalie Kitroeff

Presidential candidates from both parties have spent months hammering home the point that wages haven’t budged for American workers. But here in California, there are raises to be had. It just depends on the field you work in.

Fernando Campos is in the right place: high technology. He was paid only $25,000 when he started in his first tech job, in 2011, as a salesman at Betterworks in Santa Monica. The start-up failed about a year after he joined.

“It was brutal. I was really racking up credit card bills,” Campos, 29, said. But then he got a job, and a significant raise, at a Bay Area start-up. In 2014, he left to found his own business, CommerceLabs. Now, he says, he is “making many multiples of what we were making at Betterworks.”

In the last five years, wages per worker have increased 15% in California, faster than the vast majority of the country. Adjusting for inflation, the uptick is about 6%.

Pay has skyrocketed for a small share of Californians, most of whom are in already well-compensated fields. But large swaths of the state’s workforce in lower-paid jobs have seen compensation only inch up, if it has risen at all.

The 482,000 people who work in the state’s tech, publishing, entertainment and other information businesses have seen their average weekly wages rise 44% since 2010 not adjusted for inflation, according to an analysis of data from the Bureau of Labor Statistics. That can include tips, bonuses, paid vacation time and stock options.

Meanwhile, the 5.2 million people who work in education, health and hospitality have gotten modest raises — and in some cases have taken pay cuts.

“The better off are getting better off, and the worse off aren’t getting any better off,” said Alec Levenson, an economist at USC. “Economic gains are not spreading as uniformly across the population as they used to.”

The idea that wages aren’t increasing has become mainstream, thanks partly to presidential candidates Donald Trump and Bernie Sanders, who have outperformed expectations by tapping into deep-seated frustration over pay.

Indeed, from the 1980s through 2014, hourly compensation per worker grew by 0.9% per year, according to a 2015 report by President Obama’s Council of Economic Advisers.

Pay has not been immobile for everyone, though. In the last three decades, inflation-adjusted wages have grown by 35% for the highest earners in the country. Compensation for the lowest-paid workers declined during that period.

In California, where pay has grown at a faster clip than most states, wages have risen only slightly for those in healthcare, hospitality, transportation, construction and education. Outside of professional services, those fields have added the most jobs in California since 2010.

“The fact that those people weren’t gaining [as much] while we were expanding, that’s troubling. It’s an indication of how we are doing as an economy,” Levenson said.

There’s a straightforward explanation for why fast-growing professions do not reward their workers with big raises, Levenson said. Some of the largest industries are heavy with jobs that a lot of people are prepared to do effectively.

“Even if the field is expanding, it’s relatively easy to find people to fill those jobs without raising compensation,” Levenson explained.

A programmer, on the other hand, will be paid more and will tend to get more raises because he or she has less competition in the job market — there are simply fewer Americans who can do that work.

Healthcare workers may also be suffering because of the society-wide push to lower health spending, Levenson said.

Educators in California may also have faced unique pressures in recent years. During the recession, the state cut its per-pupil spending significantly to mitigate a growing budget deficit. After 2012, spending gradually picked up.

That was the year Kathy Anderson, a 54-year-old teacher in Pasadena, got her last raise. Her union negotiated a 3% pay bump.

“A raise of 3% is an insult, frankly,” says Anderson. It was still better than nothing. In the wake of the recession, teachers in Pasadena and other school districts took a pay cut, and agreed to unpaid days off. Before 2012, Anderson had not gotten a raise in six years.

When she started teaching English language arts to high schoolers 30 years ago, Anderson made around $25,000. Now she makes $80,000. That means her pay has gone up by about $1,800 on average for every year she’s been in the classroom.

“I go more into debt every year,” Anderson says. “We teachers say we didn’t get into teaching for the money, and that’s true, but it would really be nice to have money to live a good life.”

Overall, Americans seem relatively optimistic about their pay. Forty-six percent of employees said they expected a raise or an increase in compensation in line with cost of living expenses in 2016, according to a March survey of 2,000 workers by Glassdoor, which tracks salaries. Just 36% of workers anticipated a bump in 2009.

Ben Callaway says he has the privilege of deciding to earn more money this year. The 36-year-old freelance programmer does not have a LinkedIn profile or a website, and he doesn’t advertise his services through recruiters. Still, his work has picked up in recent months, and he sometimes finds himself in a position to turn down jobs.

“There is a glut of work to be done,” Callaway said. A born tinkerer, Callaway spent nearly four years working at a Los Angeles-based media company doing Web programming before deciding to go it alone.

He finds the ease with which he can support himself a little unsettling.

“I think it’s strange when I see my friends who are teachers, something I think is immediately useful, and they can’t find jobs, whereas I have to be really selective about what jobs I take,” Callaway said.

A version of this article appeared in print on April 14, 2016, in the Business section of the Los Angeles Times with the headline “Chasing pay – Some Californians have received big bumps in salary in recent years, but many in lower-paid jobs have seen small or no raises”

Posted on April 20, 2016, in Postings. Bookmark the permalink. Leave a comment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: