DECEMBER 2005 :: ECONOMICS

Paycheck Check
Government's Annual Wage Survey Shows Who's Up, Who's Down

By Jessica E. Vascellaro
Staff Reporter of The Wall Street Journal

Wages rose briskly last year for a small percentage of highly skilled workers, including nurses and airline pilots. But they failed to keep pace with inflation for musicians, some teachers and most other workers.

These are among the findings of the Department of Labor's 2004 National Compensation Survey, which was released a few months ago and reports hourly wages across more than 450 occupations covering 81 million workers.

Overall, average hourly wages for American workers were $18.09 in July 2004, when the government did the survey. That was up 1.9% from a year earlier. During that period, though, inflation, as measured by the consumer-price index, was 3%, wiping out the wage gains.

When viewed over a longer time period, 1997 to 2004, wages beat inflation, rising 19.9%, compared with a gain of 17.7% for the CPI. But Jim Glassman, an economist at J.P. Morgan Chase, says that wage gains outpaced inflation in the late 1990s because the economy was strong and energy prices were subdued. Now that inflation has picked up and employers are holding the line on wages, "workers are getting squeezed," he says. "We are seeing wages go down as benefit costs go up, and an energy shock like this is catching everyone off guard."

Nonetheless, there were some surprises. Despite the turmoil in the airline industry, the average hourly pay for pilots was $113.82 last year, up 15.6% from 2003 and the highest for any job category measured. Economics professors, in response to the popularity of the subject and the relative scarcity of professors available to teach it, came in second, with average hourly pay of $63.98, up 1.9% from 2003. In third place were medical doctors, with average hourly pay of $57.90 last year, up 9.4% from 2003.

At the bottom of the list are waiters and waitresses ($4.44 per hour), bartenders ($6.71) and park attendants ($7.23). Hamburger flippers and other cooks had hourly pay of $9.56 last year, up 30 cents. But all of these workers failed to keep pace with inflation from 1997 to 2004.

The National Compensation Survey is considered the government's most comprehensive look at wages, but it does have drawbacks. It doesn't accurately reflect trends for professionals whose pay is tied to company performance and stock options, which eliminates some of the nation's highest-paid executives. While it does include commissions earned by salesmen, it excludes professionals who work for themselves, including some doctors and lawyers.

But for the millions of Americans who work for a paycheck and perform typical American jobs-from doctors in hospitals to secretaries to teachers to truck drivers-the survey provides a sweeping look at salary trends.

Technology continues to be a driving force behind wage disparities. Where technology has allowed workers to become more productive or requires that they boost their skills, workers are getting paid more. In industries where technology has made workers redundant, wages failed to keep pace.

The Wall Street Journal asked Economy.com, an economic consulting firm, to compare the 2004 National Compensation Survey with the 1997 survey and to compute changes in wages, adjusting for inflation. That allowed us to see which occupations were keeping up with inflation over that period and which ones weren't. Here are some winners and losers:

Winners

Despite all the talk of white-collar outsourcing, computer programmers saw their average hourly wage climb an inflation-adjusted 21%, to $28.98, from 1997 to 2004. Jeff Lyons, a programmer in Prairieville, La., attributes the rise to the increasingly complex software needs of the government and large corporations. The industry "is more specialized and you need more certifications," he says.

The shortage of nurses, coupled with the aging and ailing population, pushed their wages up 14% during the period, to an average hourly rate of $26.87. Dental hygienists are another group of health-care workers who have registered strong hourly wage gains, despite the fact that their average annual pay has trailed inflation, since they are working fewer hours. Their average hourly wage was up an inflation-adjusted 30% for the seven-year period that ended in 2004, and now stands at $30.86. The climb has narrowed the salary gap between hygienists and dentists, whose average hourly salary fell an inflation-adjusted 3% during the period despite the fact that from 2003 to 2004, dentists' wages were up 7% after inflation to $42.91.

The housing boom has carved out several other categories of winners. Last year the average hourly pay for real-estate agents, including commissions, jumped 30% after inflation to $30.69. But wages are still lower than they were during previous housing booms.

Skilled construction workers, such as stone and brick masons, have also benefited from booming business. In 2004, masons' average hourly wage of $27.50 was up 51% from 1997 after discounting for inflation. Andrew deGruchy, a 44-year-old mason in Quakertown, Pa., says customers are growing more concerned with preserving the value of their homes and are upgrading them with expensive masonry as opposed to vinyl siding or other manufactured veneers.

Losers

Rising home construction hasn't helped all workers equally. Workers in less- skilled construction work, which has attracted a large number of immigrants, have seen their after-inflation wages decline. Doug Taylor, a former plasterer in Pittsburgh who is now the business manager for his local union, says workers are struggling to compete with immigrants from Russia and Poland who are willing to work for half the price. As a result, the average hourly wage earned by a plasterer was $14.84 in 2004, down 17% from 1997.

Truck drivers have posted some increases over the past few years in response to a nationwide shortage. From 1997 to 2004, the average hourly wage for truckers fell an inflation-adjusted 9% to $14.85.

Of all professions whose wages have failed to keep up with inflation, musicians and composers have taken some of the hardest hits. In 2004, their average hourly wage was $33.89, down 30% from 1997 and 5% from 2003 after discounting for inflation. Jan Gippo, 59, a flautist for the St. Louis Symphony Orchestra, says orchestra musicians have been squeezed by cash-strapped donors. Furthermore, many musicians in traveling productions of Broadway shows have been replaced by computers.