Wages rise locally but remain behind state, national average

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Vying for customers’ attention is nothing new for businesses.

However, fending off industry rivals in a competitive job market is a recent development.

“The wage competition is really, really high right now,” said Jennifer Pierceall Herman, industry relations manager for the Pikes Peak Workforce Center. “We hear from employers that they get somebody and then lose them quickly.”

And where are they going?

“They will leave a position to go work right up the street for somebody else for 50 cents more an hour,” Herman said.

In the past year, wages have started to go up in the Colorado Springs area for the first time since the recession.

“[Wage increases] are happening here and across the U.S.,” said Tatiana Bailey, director of the UCCS Economic Forum. “When you think about it, the recession was about nine years ago and how can it possibly take that long? But it does.”

A survey of local human resource managers by the Employers Council forecasts Colorado Springs employers will give raises averaging 3.2 percent in 2019.

That’s up from this year’s 2.8 percent and the biggest jump since 2008.

But in order to close the wage gap that exists between the Pikes Peak region and state and national averages, Bailey said the area needs the next recession to hold off at least two years.

“Part of the reason I would really like the downturn to not happen until 2020 is because it gives us more of a chance to catch up,” she said. “The nation also has upward pressure on wages right now. Obviously, we would have to outperform that wage growth to surpass the U.S., but I feel like if we could hold out for another couple of years, we could have real a chance of closing that gap.”

The wage gap

In 2017, the private industry average annual wages were $47,804 in El Paso County compared to the state’s $57,294 and the country’s $55,331, according to the U.S. Bureau of Labor Statistics and the Quarterly Census of Employment and Wages.

“It’s hard to attract and keep good people here when wages are lower like that,” Bailey said.

Increasing health care costs is one of the reasons Bailey says it’s taken a while for wages to rise.

“Nationwide and locally as well, health care costs have been going up well beyond the normal cost of living,” she said. “Employers are having to make up for that so they are having to skimp a bit on wages.”

Bailey said she doesn’t understand why Federal Reserve economists keep saying they are “befuddled” by wages not rising.

“It does not befuddle me and it’s not because I am some sort of rocket scientist. It’s everything to do with health care benefits,” she said. “Health care costs are the No. 1 concern of [smaller] businesses.”

The area’s wage gap also may have been exacerbated by a lot of technology jobs leaving the area in the late 1990s and early 2000s.

“Those were a lot of high-paying jobs and our unemployment rate went up after that,” Bailey said. “Hewlett-Packard had a huge presence here and some other tech companies as well.”

Meanwhile, other industries that have done well here in the past two or three decades — such as tourism — pay much less than IT and health care.

“Military spouses also can bring down local wages because they do a lot of moving around in their careers,” Bailey said. “And again if you have a baseline of low wages even in good economic times, like we are seeing right now, it’s still hard for most employers to start increasing wages in this environment of increasing health care costs.”

‘Here to help’

It’s when businesses are struggling to fill open positions that they contact Herman.

“My team works with the businesses — for free — to help them with their workforce needs by finding employees and by getting their jobs posted,” she said. “Wages can always come in to factor across all the industries and their job openings, and we can help analyze what the average wages being offered are and if that’s why they are having a hard time filling positions.”

The center uses Talent Neuron, an online tool that provides real-time market labor statistics, Herman said.

“It goes and data mines every position posted by companies on Indeed or any other database,” she said. “Within our area right now, which speaks to the growing competition here, our median wage across all industries and all open jobs is actually higher than Colorado-wide and even the Denver area.”

On Tuesday, Talent Neuron reported the Colorado Springs metropolitan area’s median market salary at $72,450, statewide at $68,700 and in the Denver Lakewood area $71,000.

“This tool is interesting because it does give you a little more recent market data,” Herman said. “The other data that we have that we get from our other sources, it waits for all the wage and earning reports to come in so it’s backlogged a little bit when we are looking at data from the Department of Labor and those types of sources.”

During the last month, Herman has worked with multiple employers seeking guidance on whether the wages they are offering are attractive.

“They were in the process of negotiating with people for a job and wanted to know if their offer is something that would get that person to accept the job,” she said. “If [businesses] are not open to at least having the conversation of paying more, then that might be why they are having trouble filling positions.”

Additionally, Herman’s team can help employers increase their pool of applicants for open positions.

“Sometimes they may be asking for too many qualifications and then people aren’t applying because they don’t have all those things but might still be a very good fit,” she said. “One of the things we are really trying to work with our employers on is analyzing those things. So when an employer says they want this certification and eight years of experience, we see if we can take off some of other qualifications and grow the talent pool substantially.”

Show me the money

Over the past six months, the two industries with the most job openings in the area haven’t changed, Herman said.

“Health care of course stays right up there and usually has the largest amount of job openings at any one time,” she said. “Then the information technology sector seems to always consistently have job openings that are harder to fill too.”

Bailey said those two industries include some of the area’s higher-paying jobs.

“The IT jobs definitely are often six digit [salaries],” she said. “With health care it can depend — a medical assistant is going to make much less than a registered nurse, but typically the No. 1 posted job is for registered nurses.”

Heather Jordan-Rauer, a career transition specialist for Job Corps, which is a career technical training and education program for students ages 16-24, said the current job market is better for experienced job seekers.

“It’s good for those seasoned workers but it’s harder for those just starting out,” she said.

Health care and fast food jobs always have openings, but for the Job Corps’ graduates with welding and electrician certifications, Jordan-Rauer says they are having to be patient or take lower-paying jobs outside their field.

“They are really having to dig for those positions,” she said. “I also have computer networking grads and they are having a really hard time because when they come out they come out with their certifications, they still don’t have enough experience for the postings. [Employers] want like three years’ experience or help desk experience and that’s not the kind of experience my grads get.”

Some of the school’s graduates have recently found higher-paying jobs starting out, Jordan-Rauer said, adding it just depends on their skill sets and the industry they are entering.

“Those IT jobs do pay more, and the same with health care. But still, some of our other graduates in more of the manufacturing jobs are coming out the door and taking something that pays closer to minimum wage,” she said. “And that’s not really good for them because you can’t support a family or live in this area making that little.”

If nothing else, Bailey would like to see the area’s wage average catch up with the country’s — especially as house prices continue to rise, she said.

“I think that if the national economy stays strong it’s just going to be more and more upward pressure on wages,” she said. “There is no indication that the unemployment rate is going to go up any time soon, but we are sort of due for a downturn.”

Unfortunately, Bailey believes there are indications that signal the next downturn will start at the end of next year.

“I think we have so many different factors right now that one of them can be that sort of cascading trigger for some of the other things going on and cause the next recession,” she said. “But for now, as long as the national economy stays strong, Colorado and this area are going to be even stronger and wages will continue to go up.”