Working Class Gets First Raise in Years Wages Are Starting to Rise - in Some Cases More Than at Any Time since the 1960s

Article excerpt

For the first time in nearly a decade, the real wages of average workers are starting to rise - putting more money in the pockets of millions of Americans from Miami to Seattle.

While the gains are not enough to allow anyone to purchase a bungalow in Bermuda, they represent some of the biggest increases in living standards in 30 years for lower-income America - a group left out of the "golden" economy of the mid-1990s.

In other economic expansions since World War II, workers saw their wallets swell quickly. But not in the recovery that began in early 1991. Most have seen their paychecks shrink after inflation. Until now.

"The average guy hasn't had it this good in decades," says Bruce Steinberg, chief economist for Merrill Lynch & Co. in New York.

The shift in wages is evident at Clean Edge, a janitorial service in Needham, Mass., a western suburb of Boston. It now offers $7 an hour when advertising for new employees. A year ago the firm offered $6 an hour.

"It's due to things being good and there being plenty of jobs out there," says Keith Wilson, owner of Clean Edge. "I attract more calls at $7 an hour than $6."

The tighter labor market is noticed by both statisticians and much bigger employers than Mr. Wilson, with his eight employees:

* The Bureau of Labor Statistics in Washington reports that wages and salaries were up 3.3 percent in the year ending in June. Total compensation, which includes such benefits as health and pension costs as well as wages, was up 2.9 percent. Both increases beat the rise in the consumer price index of 2.5 percent in the same time.

* Using a different calculation, Mr. Steinberg finds a 2.2 percent gain in real wages in the past 12 months.

* Michael Calabrese, an analyst at the Center for National Policy, a Washington think tank, estimates real compensation is now back to its 1989 peak before the last recession. But it isn't back to 1985 levels.

"We feel that same modest growth in wages," says Carl Camden, an executive vice president at the headquarters of Kelley Services in Troy, Mich., one of the nation's largest providers of temporary workers.

Moving up from low rungs

Even workers near the bottom of the income ladder are racking up better wages.

"Low-wage workers were taking it on the chin for the last 15 years," says Jared Bernstein, an economist at the Economic Policy Institute, another Washington think tank. "But there have been broad-based wage gains over the last year."

By his estimate, a man who made $7.20 an hour a year ago is now making $7.27 in constant dollars - not enough to buy a family yacht but movement in the right direction. A woman at the same point on the income ladder has seen her hourly wage rise less, to $6. …