Has your paycheck taken a hit? You're not alone
COOK COUNTY | If you're not a teacher or in health care or 'professional services,' chances are your pay has shrunk in the last year -- but things are looking up
BY SANDRA GUY Staff Reporter
Copyright by The Chicago Sun-Times
March 6, 2010
If it feels like your paycheck has been shrinking, you're not alone.
Last year, wages in Cook County shrank 1.2 percent from midyear 2008, according to the latest midyear figures from the U.S. Bureau of Labor Statistics.
» Click to enlarge image
From top left, clockwise: Geraldine Kimerough an IT professional, Tom Stillwell a law clerk in Albany Park, Natalize Zavis an accountant, and Rick Spencer a Cook County employee all say they've felt the squeeze of a pay cut and the rough economy.
Construction industry at worst since Great Depression
That's the first decline in pay here since the government began compiling such data in 2002.
Only a few types of workers saw pay gains:
• State and local government workers.
• Health care workers.
• And lawyers, accountants and others in "professional services."
Overall, 18 percent of Chicago area employers cut their workers' pay last year, according to a survey by the Management Association of Illinois.
But there are signs that things will be turning around. Chicago area companies' pay plans for 2010 show that businesses that froze wages last year are planning to start raising pay this year. And average hourly earnings nationwide have gone up 1.9 percent in the last 12 months, according to the government's monthly jobs report for February.
For now, though, most workers in the Chicago area -- union and non-union alike -- are still facing a pay squeeze. That includes involuntary -- and unpaid -- furloughs, higher health insurance premiums and frozen or reduced pension and 401(k) contributions.
Geraldine Kimerough is one of them.
"I didn't get a raise, and they increased the benefit deductions from my paycheck, so I'm making less," says Kimerough, 49, an information technology worker from Roselle. "I don't like to call it a pay cut because that makes me feel bad. It cuts into my fun money. I like to go on vacation to places that are hot -- Phoenix or Las Vegas. But I won't this year. What's the point if you have nothing to spend when you get there?"
Even those who work in professional services -- jobs that, on average, saw pay grow -- are under pressure.
"I got a raise and a bonus this year, but they were both half the size they normally are," says Natalie Zavis, 28, a Chicago accountant. "I'm not happy about it. But, compared to everybody else, it's good, so I can't complain. I'm thankful to be working."
Nonunion workers at some of the area's biggest employers -- Motorola, Sears and Navistar International -- saw their base pay frozen in 2009.
Unionized employees continue to work under contracts that call for pay increases. But they're facing delays in contract negotiations and increased pressure because of layoffs and their employers hiring more part-time workers, union spokesmen say.
Unemployment now stands at 9.7 percent nationally. In the Chicago area, it's even worse -- 11.1 percent.
Declines in pay and in wage growth reflect "the hidden cost of this recession," says Heidi Shierholz, a labor economist with the Economic Policy Institute, a Washington, D.C., think tank.
"People are hanging on to what they have, but they are feeling this recession in terms of reduced hours and reduced paychecks," says Shierholz.
And the future? Economists are projecting that unemployment will go no lower than 8 percent for the next two years before reaching 5.3 percent in 2014, according to the Congressional Budget Office.
For now, Shierholz says, there's nothing to push wages higher.
"Employers don't have to pay a wage premium to keep or to get good workers when unemployment is high," she says. "Wage growth will take this on the chin for years to come . . . . People at the middle level of income will really take the hit."
Where pay stands -- A sampling of Chicago-area employers
CHICAGO PUBLIC SCHOOLS
Last year, most employees at the Chicago Public Schools' central office had a pay freeze and also six unpaid furlough days -- which amounted to a 2.2 percent pay cut. This year, they face another pay freeze and three weeks of furloughs, which would reduce their pay by 5.7 percent. Teachers got a 4 percent raise under their contract. But top school officials have warned that the district can't afford the 4 percent raise this year. They want concessions from the Chicago Teachers Union, such as a pay freeze or furlough days. If the union doesn't agree, the district has the authority to increase class sizes and lay off teachers.
On average, the county government's nonunion work force -- about 25 percent of the total of 24,000 employees -- gets 2 percent annual wage hikes, with "step" increases based on job title, experience and years of service. And 2009 was no different, said Joe Sova, who heads Cook County's human resources office. It's more difficult to track an average for unionized county workers, who are represented by four major unions and covered by about 50 collective-bargaining agreements. The Services Employees Union International has roughly 3,000 employees -- more than half of those working in health and hospitals and the rest scattered throughout the county government -- who have been working without a contract since Nov. 30, 2008. That means pay has been frozen for those workers, except for the step increases.
CITY OF CHICAGO
Nonunion city employees and civilian union city employees saw their wages reduced by a net 1.5 percent from 2008 to 2009. Their pay rose 3 percent in January 2009 -- the first increase for nonunion employees since January 2007. Most unionized non-police or fire employees have received annual increases for that same two-year period. But, through reduced workweeks and required unpaid days, most ended up with a 4.5 percent wage reduction in July 2009 -- with the exception of members of the American Federation of State, County and Municipal Employees and the Teamsters, who chose layoffs of their members over pay reductions. Because police and fire labor contracts have been under negotiation, and their unions having chosen not to participate in the furloughs, wages for those workers remained level from 2008 to 2009. Also, if the sworn unions are awarded pay increases through arbitration, the city will pay those increases retroactively. For 2010, nonunion and civilian union city employees will see, on average, a 9 percent reduction in wages resulting from a full year's worth of reduced workweeks, or furlough days and unpaid holidays. The 5,000 City of Chicago employees who are members of AFSCME got a negotiated 3 percent pay raise in 2009 and will receive a 3 percent raise this year. AFSCME members did not accept Mayor Daley's demand to take unpaid holidays and furlough days, but they did have to concede to the city's mandatory three unpaid shutdown days, which amounts to a 1.15 percent pay cut.
STATE OF ILLINOIS
AFSCME's 40,000 members who work for the state received a 2.75 percent pay raise for the 2009 budget year and another 2.5 percent raise this year. They have deferred another 0.5 percent raise slated to go into effect in July and are being encouraged to take voluntary, unpaid furlough days because of the state's budget crisis.
The CTA's unions have negotiated annual salary increases of 3.5 percent a year over the next two years. The CTA has asked unions to forgo this year's increase, as well as to accept other cuts, to help address a $95.7 million budget deficit. But the unions have refused, and, on Feb. 7, the CTA laid off 1,057 workers and cut bus service by 18 percent and L service by 9 percent. Nonunion CTA employees had no pay raises in 2009 and none this year. In 2009, upper management took three unpaid furlough days and three unpaid vacation days. This year, all nonunion employees will take from six to 12 furlough days, depending on their salary, plus six unpaid holidays. Employees who make more than $70,000 have to take the maximum of 16 unpaid days this year. Also, all CTA employees -- union and nonunion -- have seen the amount of their pension contributions increase from 3 percent three years ago to 6 percent in 2009 and to 8.35 percent this year.
Navistar -- a Warrenville-based truck manufacturer suffering through the worst truck market in 41 years -- froze base salaries for nonunion workers in 2009. No decision has been made on merit-pay increases for 2010, according to the company.
At Schaumburg-based Motorola, U.S.-based employees' base pay was frozen last year and this year. But workers still received promotions, equity grants and bonuses for superior performance and will again this year, the company said.
Sears hunkered down in 2009 because of poor retail sales and the economic downturn, but the Hoffman Estates-based retailer said it will reinstate pay increases this year for employees deemed to be high-performing.
Grainger, a facilities-maintenance supplier based in Lake Forest, plans to reinstate merit pay raises this year for eligible employees, after freezing them for executive and salaried employees in 2009.
Employees of Integrys Energy Group, the parent company of Peoples Gas, gave eligible nonunion employees a 3.2 percent base pay increase in 2009 and plans a 2 percent base-pay increase this year. But, because of the recession, the company is requiring those employees to take one week of unpaid furlough this year -- which amounts to no pay increase this year.