What’s your chance of a pay raise? In California, it depends on what you’re doing
Presidential candidates from both parties have spent months hammering home the point that wages haven’t budged for American workers. But here in California, there are raises to be had. It just depends on the field you work in.
Fernando Campos is in the right place: high technology. He was paid only $25,000 when he started in his first tech job, in 2011, as a salesman at Betterworks in Santa Monica. The start-up failed about a year after he joined.
“It was brutal. I was really racking up credit card bills,” Campos, 29, said. But then he got a job, and a significant raise, at a Bay Area start-up. In 2014, he left to found his own business, CommerceLabs. Now, he says, he is “making many multiples of what we were making at Betterworks.”
In the last five years, wages per worker have increased 15% in California, faster than the vast majority of the country. Adjusting for inflation, the uptick is about 6%.
Pay has skyrocketed for a small share of Californians, most of whom are in already well-compensated fields. But large swaths of the state’s workforce in lower-paid jobs have seen compensation only inch up, if it has risen at all.
The 482,000 people who work in the state’s tech, publishing, entertainment and other information businesses have seen their average weekly wages rise 44% since 2010 not adjusted for inflation, according to an analysis of data from the Bureau of Labor Statistics. That can include tips, bonuses, paid vacation time and stock options.
Meanwhile, the 5.2 million people who work in education, health and hospitality have gotten modest raises — and in some cases have taken pay cuts.
“The better off are getting better off, and the worse off aren’t getting any better off,” said Alec Levenson, an economist at USC. “Economic gains are not spreading as uniformly across the population as they used to.”
The idea that wages aren’t increasing has become mainstream, thanks partly to presidential candidates Donald Trump and Bernie Sanders, who have outperformed expectations by tapping into deep-seated frustration over pay.
Indeed, from the 1980s through 2014, hourly compensation per worker grew by 0.9% per year, according to a 2015 report by President Obama’s Council of Economic Advisers.
Pay has not been immobile for everyone, though. In the last three decades, inflation-adjusted wages have grown by 35% for the highest earners in the country. Compensation for the lowest-paid workers declined during that period.
In California, where pay has grown at a faster clip than most states, wages have risen only slightly for those in healthcare, hospitality, transportation, construction and education. Outside of professional services, those fields have added the most jobs in California since 2010.
“The fact that those people weren’t gaining [as much] while we were expanding, that’s troubling. It’s an indication of how we are doing as an economy,” Levenson said.
There’s a straightforward explanation for why fast-growing professions do not reward their workers with big raises, Levenson said. Some of the largest industries are heavy with jobs that a lot of people are prepared to do effectively.
“Even if the field is expanding, it’s relatively easy to find people to fill those jobs without raising compensation,” Levenson explained.
A programmer, on the other hand, will be paid more and will tend to get more raises because he or she has less competition in the job market — there are simply fewer Americans who can do that work.
Healthcare workers may also be suffering because of the society-wide push to lower health spending, Levenson said.
Educators in California may also have faced unique pressures in recent years. During the recession, the state cut its per-pupil spending significantly to mitigate a growing budget deficit. After 2012, spending gradually picked up.
That was the year Kathy Anderson, a 54-year-old teacher in Pasadena, got her last raise. Her union negotiated a 3% pay bump.
“A raise of 3% is an insult, frankly,” says Anderson. It was still better than nothing. In the wake of the recession, teachers in Pasadena and other school districts took a pay cut, and agreed to unpaid days off. Before 2012, Anderson had not gotten a raise in six years.
When she started teaching English language arts to high schoolers 30 years ago, Anderson made around $25,000. Now she makes $80,000. That means her pay has gone up by about $1,800 on average for every year she’s been in the classroom.
“I go more into debt every year,” Anderson says. “We teachers say we didn’t get into teaching for the money, and that’s true, but it would really be nice to have money to live a good life.”
Overall, Americans seem relatively optimistic about their pay. Forty-six percent of employees said they expected a raise or an increase in compensation in line with cost of living expenses in 2016, according to a March survey of 2,000 workers by Glassdoor, which tracks salaries. Just 36% of workers anticipated a bump in 2009.
Ben Callaway says he has the privilege of deciding to earn more money this year. The 36-year-old freelance programmer does not have a LinkedIn profile or a website, and he doesn’t advertise his services through recruiters. Still, his work has picked up in recent months, and he sometimes finds himself in a position to turn down jobs.
“There is a glut of work to be done,” Callaway said. A born tinkerer, Callaway spent nearly four years working at a Los Angeles-based media company doing Web programming before deciding to go it alone.
He finds the ease with which he can support himself a little unsettling.
“I think it’s strange when I see my friends who are teachers, something I think is immediately useful, and they can’t find jobs, whereas I have to be really selective about what jobs I take,” Callaway said.
The view from Sacramento
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