Monday, July 10, 2006

The well-paid educated workforce making more money.

Culture: Duh. Actually I shouldn't be too harsh on this article just because it points out the obvious on why having a good education and graduating from college is the smart thing to do these days. But the fact the article points out the obvious irritates me because I suspect a different agenda behind it.

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.
Yep, same old class warfare on how the rich getting richer and the poor getting poorer. Why did I think they would just play the story straight?
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. ....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."
We will get back to Quarles at the end, but those who didn't see that globalization, innovation, automation and other "tion's" in business putting pressure on the low end of the pay scale have themselves to blame. Unless you want to halt or ban technology this is the wave of the future.
"This is a divided labor market," said Jonas Prising, president of Manpower North America, a large staffing firm. "There's no talent shortage for people with low skills or no skills, but you do have a talent shortage for people with specific skills." In the 1990s boom, Prising said, there was a shortage of low-skilled as well as high-skilled talent, sending wages up across the board. What changed? Many new technologies and ways of operating -- often aimed at cutting labor costs -- were in their infancy in the late 1990s. Now they are maturing, tamping demand for low-skilled workers. Some examples: The retail industry has shifted to big stores that require fewer cashiers (two-year wage gain nationwide: 2.1 percent) and stock clerks (2.7 percent) than the department stores and small shops they replace. Firms that once employed dozens of people handling payrolls now hand the work to huge companies that do nothing else and rely heavily on automation (payroll clerk wages: up 4.7 percent). And long-distance telephone costs have dropped so much that it is feasible for big companies to hire people in the rural United States or abroad -- far from corporate offices -- to take phone orders (order clerk wages: up 3.2 percent). The banking industry offers a particular window on the changes. Banks in the Washington region are booming, with $28 billion more in assets in 2005 than they had in 2003, a 27 percent increase, according to data from bank regulators. "We're adding locations, our competitors are adding locations, you have new entrants in the marketplace," said William Couper, president of Bank of America in the Washington area. "There's a real competition for qualified talent." As a result, the average salary of financial managers in the region rose 15.8 percent between 2003 and 2005, to $102,440. It's a different story at the teller's window. More people are banking on the Internet, by telephone or at teller machines. So while banks had 88 tellers per $1 billion in bank assets in the region in 2003, two years later they had 84, based on a comparison of data from bank regulators and the Labor Department. And in those two years, tellers' average salary rose only 4.6 percent, to $24,090. When demand for even a few types of low-wage jobs goes soft, wages can be held down in all of them, economists say. That's because a worker qualified to be a retail clerk might just as well become a security guard or receptionist. That means, in effect, that all low-wage workers are competing with one another, a sharp contrast with more specialized jobs.
Immigration comes into play, though the writers leave out if legal immigration or illegal aliens are to blame for this fact.
....Immigration may be another factor in the weak wage gains for those with low incomes. Recent immigrants, legal or not, tend to be less educated than the population at large and thus compete with low-skilled native-born Americans for jobs. Studies vary, but some economists estimate that immigration reduces wages for native-born Americans without a high school education by as much as 8 percent. "The least-skilled natives are hurt somewhat by immigrant competition," said Jared Bernstein, senior economist at the Economic Policy Institute, which researches issues affecting low-wage workers. "But then, in the 1990s, you had one of the fastest decades of immigrant inflow on record, and low-skill wages did just fine. It boils down to immigrant competition for low-paid workers is a whole lot tougher in an unfavorable job market."
What does Quarles think about all this?
Quarles, the shipping clerk frustrated by puny raises, isn't waiting for the economics to change. Foreseeing that package handling would grow only more automated, he enrolled in college. He just graduated and plans to look for a job with more promise. "This," he said, "isn't a career for me."
He is going to be successful in a new career because he sees what is coming and doing something about it instead of doing nothing.

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