SPECIAL REPORT: EXECUTIVE PAY : Dreams of Many Blue-Collar Workers Crumble Into Wage Gap

Confident that landing a job at a utility company would mean long-term financial security for his family, John Ortiz joined Southern California Edison three years ago even though it meant taking a pay cut.

Ortiz, trained as a diesel mechanic, figured he would make up the lost wages in a couple of years and eventually earn far more than he could have in his old job.

But as it turned out, Ortiz instead got caught up in a phenomenon that has upset the plans and expectations of many workers over the last two decades: stagnant wages. Today, he still makes slightly less than the $15 an hour he used to earn.

“I expected a better life than this,” said the 33-year-old Ortiz.

While paychecks have skyrocketed for top executives at many of the nation’s biggest companies, times have been tough for most workers.

Earnings, on average, have been limping along. Although different economic gauges vary, figures generally show that workers’ wages and benefits have barely stayed ahead of inflation since the early 1970s. Wages by themselves actually fell behind the cost of living.

That marks a big comedown from the previous two decades, when pay climbed robustly as the nation’s growing prosperity was spread widely through the economy.

Moreover, the figures for the overall work force mask the economic losses suffered by vast groups of workers. While highly educated professionals, particularly women, have posted smart gains in recent years, blue-collar workers, particularly men, have fared miserably.

The result has been a widened wage gap between people at opposite ends of the educational scale. According to an analysis by the Economic Policy Institute, a liberal think tank in Washington D.C., the nearly three-quarters of the work force with less than four years of college suffered a 12.3% decline in wages from 1979 to 1993. Most of the loss was borne by men.

As a result, the prospect for young, blue-collar workers to secure middle-class lifestyles has severely eroded, said Lawrence Mishel, EPI’s research director.

“Young people who want to own a house, have a family, are seeing their dreams collide with the reality of the lack of upward mobility,” added Scott Hanlon, a business representative with Local 47 of the International Brotherhood of Electrical Workers.

Hanlon cited Ortiz, a member of his local, as an example. Although Ortiz and his wife managed to buy a house in Baldwin Park, their $130,000 mortgage is proving to be a crushing burden.

To supplement the income from his Edison job and his wife’s full-time position as a customer service representative, Ortiz moonlights on weekends cleaning trucks. But while that brings their family income to about $50,000 a year--compared to the average Los Angeles County family income of $39,035, according to 1990 U.S. Census data--the Ortizes still struggle to make ends meet.

Along with the lower-than-expected pay raises has come frustration with the job itself. Despite two years of college training and Navy experience as a diesel mechanic, Ortiz remains locked in the original job he took with the utility--pumping gas and washing company cars driven by Edison executives.

And now, given the changes beginning to sweep through the industry, Ortiz fears he may wind up out of work. “I could be getting laid off at any time,” he said.

Ortiz said he and his wife, the parents of a 3-year-old boy, want to have another child, but because of their financial concerns, they feel they “can’t take the risk.”

One of the reasons blue-collar workers have fallen behind, economists say, is the rise of computer technology. Higher technology eliminated the jobs of many lesser-skilled workers, according to experts, while providing more opportunities for highly educated professionals.

But the widened wage gap--which appears to have bulged in the late 1970s and early 1980s and held firm since--is blamed on many other factors, too. Some analysts point to declining union strength, intensified international competition and the arrival of large numbers of unskilled immigrant workers.

The downward pressure on wages also started squeezing some college graduates in the mid-1980s. A recent study shows that men in the 45-to-54 age group with four years of college--traditionally big wage earners--saw their pay fall 14% from 1988 to 1992.

Frank Levy, a Massachusetts Institute of Technology economist and one of the study’s authors, said many workers in this category lost their jobs as companies opted to slash costs by streamlining management. The older workers were vulnerable, he said, because of their relatively high pay and, in many cases, limited computer skills.

These workers, in turn, often found new work only after accepting pay cuts or by going into business for themselves as consultants, sometimes barely scratching out a living.

Joel Finkel, 57, of Woodland Hills was one of those corporate discards. He had more than 30 years’ experience as a program manager and technical specialist in such fields as aerospace, robotics and life-support systems. But when a defense spending cutback put him out of a job in 1992, all that experience went for naught.

He job-hunted for a year but couldn’t find anything in his line of work. A stumbling block was the concern of prospective employers about his salary history.

Finkel was willing to take a pay cut, but having earned $62,000 a year in his last job, he said, “I kept hearing that ‘we can’t afford to pay you that kind of money.’ ”

Finally, early in 1993, he went to work as an insurance salesman. Struggling to develop a business amid the weak Southern California economy, he now makes about $12,000 a year.

It’s not what he wanted, but at least it’s a job. “I’ve got a mind,” Finkel said. “I want to use it.”

The pay squeeze is also an unpleasant fact of life for Finkel’s son, Howard, an engineer working for an environmental consulting firm in the Washington area.

The younger Finkel, at age 33, holds a master’s degree and is in a field thought to have a secure future. Yet he has seen his annual raises shrink from as high as 20% to, most recently, 2.5%.

Likewise, the job insecurity that afflicts less-educated workers haunts Howard Finkel amid the cost cutting that has swept into his industry. Some of his colleagues have been forced to take 20% pay cuts to hold on to their jobs.

The younger Finkel fears that secure consulting jobs will be replaced by temporary, and often lower-paying, contract work, reflecting the loosening ties between employers and employees throughout the economy.

At one time, he figured his future was secure with the company and that he could count on climbing steadily up the income ladder. But no longer.

“I’m not depending on the company to take care of me through thick and thin,” he said. “They can’t. It’s a business.”