Career Journal: Keeping Up Is Hard to Do --- With Wages Flat, a
Family Struggles to Make Ends Meet; Why the Chevy Stays Parked
19 July 2005The Wall Street Journal
B1
Lower Burrel, Pa. -- MARK AND DONNA Bellini don't need economists to tell them that wages for many workers have not kept pace with inflation.
Mr. Bellini, a 51-year-old line technician for Comcast Corp., hasn't received a pay increase in three years, since 2002. His wages have been stuck at $19.10 an hour while overall consumer prices have risen 8%. Since then, however, the cost of many necessities has soared well beyond the averages. As of June, for example, the price of gasoline had risen 55%, and bread and meat rose 10% and 18%, respectively. Milk prices jumped 14% and electricity 11%.
Despite an economy growing at roughly 4%, healthy corporate profits and low unemployment levels, annual wages of workers in nonmanagerial positions -- representing about 80% of the U.S. work force -- rose 2.7% in June from a year ago, according to the Bureau of Labor Statistics. But adjusted for inflation, which cooled in June as gasoline prices declined, those wages were unchanged from a year ago. Annual wage growth hasn't outpaced inflation for 14 months.
For families like the Bellinis, the day-to-day reality behind the data is stark and far-reaching. At roughly $60,000, their annual income hovers just below the $62,400 U.S. median for married couples. And yet the family is living far less comfortably than that benchmark used to imply.
A two-room addition to their small house, begun while Mr. Bellini was still counting regular wage increases, is still unfinished. To help pay for clothes and save for a used car, the couple's 14-year-old son took a $5.15 an hour job as a dishwasher at a local restaurant. Mr. Bellini himself wears a worn pair of five-year-old sneakers. Perhaps most worrisome, the couple counts almost no savings, and they haven't, as once planned, been able to start a college fund for their two teenage sons. "The sense of security is gone," Mrs. Bellini says.
The Bellinis, like most Americans, have managed to see some income growth. But in contrast to many employees -- who received bonuses in 2004 or realized stock gains -- the family has stretched itself with sweat equity. Last fall, Mr. Bellini's wife, Donna, 47, increased the hours she works as a secretary in an eye doctor's office from 24 to roughly 38 hours a week at $10 an hour, receiving vision care as well. That has boosted the family's take home pay to about $3,200 a month -- money that's come in handy to offset rising property taxes. Utility, mortgage, food and life insurance bills total $2,000 a month. Other bills for gasoline, clothing, sports related expenses for the two boys, and extraordinary costs like furnace repairs, quickly consume the rest.
Family outings are rare. The Bellinis haven't gone to a movie together in the past year and gave up their Friday night tradition of eating out at Ida's, an Italian restaurant where the owner makes everything from scratch. Having already sold the family's camping trailer, Mr. Bellini last year sold his pickup because it was too costly to fill up. If they go on vacation now, they sleep in a tent.
At home, Mrs. Bellini implores the rest of the family to take shorter showers to save money on the water bill, and clips coupons for her twice-a-month $200-to-$300-a-trip grocery outings. In some cases, the same dollar doesn't go as far, because companies have altered product sizes. A big box of laundry detergent used to be 100 ounces, but is now 80 ounces, for example, according to Mrs. Bellini. She travels to Wal-Mart for better bargains, but only if the savings offset gasoline for the family's 2000 Chevrolet Impala. "We try to keep the car parked as much as possible," says Mr. Bellini, which is hard with two boys, 14 and 13, playing soccer and football.
In recent years, many other employees have faced plant closings, and seen pensions and health-care benefits turn out to be less secure than previously thought. Even workers who have seen raises often find that the extra income fails to cover rising costs, especially higher health-care premiums.
Mr. Bellini's employer, Comcast, has fared relatively well, thanks to strong subscriber growth for its broadband Internet services. The company says its employees received wage increases averaging 2% to 4% in each of the last three years and blames Mr. Bellini's lack of a raise on unresolved union contract negotiations. "Mr. Bellini's situation is not reflective of our 59,000 cable employees," says D'Arcy Rudnay, a company spokeswoman.
To be sure, not all workers are suffering and some government measures suggest that household incomes are growing at a healthy pace despite the anemic growth in wages. In May, personal income grew 6.7% over the previous year, according to the latest available figures. Other nonwage forms of income, including bonuses and stock option exercises, have contributed to the rise in personal income. It's unclear, however, to what extent hourly workers enjoy such gains.
"The reality of these wage trends becomes evident when families find themselves more pinched just trying to meet their basic consumption needs," says Jared Bernstein, an economist at the Economic Policy Institute. Higher corporate profits, he says, have benefited workers mainly at the top.
At this point, companies are not hiring enough workers to tighten the labor market -- a scenario that would compel increased wages. Some say rising health-care-benefit costs are consuming much of the windfall that would have gone to wage increases. Still, some economists say it's only a matter of time before wages pick up. Productivity has grown over the past three years at its fastest rate since the early 1950s, which should eventually allow companies to boost real wages beyond consumer prices.
In spite of the couple's thrift, bills mount, spurring arguments. When the delicate subject of credit-card balances creeps into a conversation, Mrs. Bellini instructs her husband, "Close your ears," and admits the balance has grown to $6,000. She quickly explains why: brakes for the car, school clothes, repairs to the furnace. Her husband remains silent for several moments and admits he doesn't have a single dollar in his wallet and won't until he receives his paycheck two days later.
The family continues to look for ways to economize. Mr. Bellini's occasional hunting and fishing supplements meals. This year, the family planted a small rectangular garden for tomatoes, peppers, onions, snap peas and lettuce. Romaine lettuce, at $1.29 a head, "can rot on the shelf before I'll buy it," says Mrs. Bellini, sitting on a living room couch given by a neighbor. In a pot across the room, a seedling has climbed about five inches. The carefully tended plant sprang from the seed of an orange Mr. Bellini ate a while back. "I nurture the hell out of it," he says of the plant.
The couple worries about the future. They invest only 1% of Mr. Bellini's salary into his 401(k) retirement plan, down from 6% when he was getting regular wage increases, and withdrew $5,000 to pay for bills. The plan, worth $38,000 in 2000, is now worth $24,000 because of the deductions and lower stock prices. A separate IRA account is worth about $33,000, having declined from $46,000 after Sept. 11, 2001. "That's nothing," says Mr. Bellini. "What's $60,000 going to get you in retirement?"
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