Wichita sees signs that pay rates could begin to rise

The Wichita economy is reaching a critical point, and wage growth is poised to accelerate.

At least for some people.

With experience.

In sought-after fields.

For the rest of us? Likely the same slow pay raises in 2015 as in past years.

But you have to start somewhere.

The good news is that inflation is minuscule — in particular, the cost of gas has fallen by nearly half — which means you’re not losing much ground in purchasing power.

The bad news is that it’s six years of not getting ahead.

Between 2009 and 2013, the most recent years available, the median Wichita area wage increased 2.9 percent, not including benefits such as health insurance. That not 2.9 percent per year. That’s over the whole five years. That’s less than 1 percent per year.

Wichita wages grew at about half the pace of national wage growth — the subject of much anxiety among policy makers. Nationally, median wages rose 5.7 percent over the same five years, using the same U.S. Bureau of Labor Statistics Occupational Employment Statistics.

National wage growth appears to be speeding up. The U.S. Labor Department said Friday that the employment cost index, which measures pay and benefits, rose 2.2 percent in 2014, up from 2 percent the previous year. That's the biggest gain since 2008 — but still slow compared to the more typical 3.5 percent growth.

But back in Wichita, pay increases still feel pretty sloooooooooow.

“It’s sort of like watching a race between a turtle and a snail,” said Sharon Durmaskin, who has freelanced as Durmaskin Communications after being laid off in 2008.

Durmaskin said she did pretty well last year, and this year looks to be even better. She does a variety of contract writing, blogging, social media and copy editing. But she still hasn’t made it back to the roughly $40,000 salary she made before being laid off.

She’s had to give up her house for an apartment, but she’s her own boss and can work from Reverie Coffee Roasters on East Douglas whenever she wants to. She takes a philosophical approach.

“There is a reason these things happen,” she said. “It’s a learning experience, a growth experience. I think about it positively.

“Life is a journey, not a destination.”

Why so slow?

The problem is pretty simple: Business is still pretty slack here, and there’s a lot of unemployed and underemployed people. Businesses don’t have to raise pay.

“The labor market overall is very soft and there’s nothing much pushing wages up at this point,” said Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University. “Now, if we get into particular sectors, that’s a different story. There may be some tightening.”

But there’s also deeper changes going on. Local wages, like so much of the Wichita economy, are influenced by what’s happening in the aircraft industry.

Manufacturing wages locally rose 5.5 percent between 2009 and 2013, according to data from the Bureau of Labor Statistics, but that applies to fewer and fewer people.

About 15,000 aircraft production jobs, a third of peak 2008 employment, have been lost. That has caused a big drag on local wages, not only because those workers aren’t spending and supporting other jobs, but also because other manufacturers aren’t forced to compete with those wages, Hill said.

For decades Wichita as a metro region had unusually high wages because of the high pay of its dominant industry, especially at Boeing. Unionized workers at Boeing Wichita were paid the same as the Boeing workers in Seattle and were paid well.

Wichita depends on manufacturing, Hill said, and other than commercial aircraft construction, its manufacturers aren’t seeing a lot of increasing demand. For instance, agricultural machinery has slacked off considerably in the last year as crop prices have fallen.

“It’s just not the time for our growth,” he said.

What’s hot

The people at the Specialists Group make it their business to know who’s hiring, what they want and who’s available.

They’re a recruiting and staffing agency. They get orders from companies seeking candidates for particular positions and they match it up to their huge database of applicants that they have developed over the decades.

During a recent chat in their tidy second floor boardroom overlooking Douglas and Broadway, a group of top staff said that they are seeing the market tightening in some areas.

“I think that we are at a turning point,” said firm vice president Bim Heineman.

All of the good candidates seeking new jobs at good salaries have gotten them, he said. Demand equals supply. That’s in nearly every profession, Heineman said, from “entry-level clerical all the way to high-level accounting, high-level engineering, high-level IT.”

The market may be warming up, but it’s certainly not hot. That means the Specialist Group is seeing a lot more resumes from people who are applying for jobs for which they aren’t qualified. For the most part, employers aren’t ready to hire them.

“We might run an ad for a receptionist for good money, and we’ll have a stack of resumes that respond that they are servers or worked at a bowling alley or something, so these people are definitely in the market, and desperate, but they don’t have the qualifications,” said Jay McManus, the firm’s chief executive officer.

If a company now wants somebody with good experience and good skills, it may have to wait a while. But, they agreed, local employers are still generally not willing to pay preferred new hires more than the people they replaced because it tends to drive up the whole company wage scale — and that is what’s holding down general wage growth.

That’s not true of every field, however, they said. The hottest fields remain accounting, information technology and aerospace engineering – if the fit is right.

“Each aircraft has its own skill set, and they are holding out for that exact candidate,” said Jason Titus, the firm’s business development coordinator.

One surprisingly hot job, said Brian Campbell, the firm’s chief financial officer, is commercial loan officer. Because there hasn’t been much commercial lending since 2008, banks haven’t groomed many younger commercial bankers. They could fill 10 of those jobs right now if they had qualified candidates.

Who’s up, who’s down

Statistics from the U.S. Bureau of Labor Statistics show that those areas that have gained the most pay tend to be those in highest demand: high technology, and some of the professional, management and technical careers.

Computer programmers, as a group, have seen their pay rise 26 percent between 2009 and 2013, but technology jobs change so much that it’s hard to match a job from 2009 with one five years later because the skills can be dramatically different. The key is that the field is growing, evolving, spreading — constantly demanding more and differently skilled people.

Doug Jenkins, longtime owner of Professional Software, based in Old Town, said there are whole booming fields in technology that only just emerged in the last five years. Some of the fastest growing fields are in data management — those who analyze and compare databases to, for instance, match consumer addresses with buying habits — and, in the wake of scores of huge data losses, computer security.

“All of these companies, they realize what a computer hack is doing to their image,” Jenkins said.

Jenkins’ firm is far more low-key, doing companies’ back office functions such as accounting and inventory management.

He laughed, sort of, when he explained that while young people seek out technology jobs, it’s usually the glamorous ones.

“There are so many facets to technology,” he said. “There’s gaming, the phone app side and a huge evolution in applications for the cloud, which didn’t even exist eight years ago. For me, it’s harder to find folks.”

Kent Kruse, president of construction company Kruse Corp., said that last year he signed a union contract with his workers. They got a 1.5 percent per year increase in wages each year for three years.

Kruse said the high union wages have priced him out of most jobs, but their high skills and the union’s ability to find skilled help at short notice allows him to compete for the complex, high-dollar jobs, such as for schools.

“To remain competitive, I would have loved to keep it lower, but it feels fair,” he said. “The other side probably wishes they could have got more.”

In contrast, the segment containing teachers and teaching helpers of all kinds as a group have seen their pay actually fall from 2009 to 2013, according to the BLS data. To some extent that may reflect the retirement of higher-paid, older employees and more lower-paid, younger teachers.

But it almost certainly reflects the fact that teacher wages have been slowly increasing — or not increasing at all — during the recession, said Harold Schlechtweg, business representative for the Service Employees International Union, Local 513, which represents para-professionals in the Wichita School District.

It’s been a weak six years, he said, and it doesn’t look promising in the near term because of the perilous condition of the state budget.

“We get money from the state, and if the state isn’t giving, you can’t get blood out of a turnip,” he said.

This story was originally published January 31, 2015 at 1:24 PM with the headline "Wichita sees signs that pay rates could begin to rise."