Georgia Voices: The Economy: Stagnant wages a worry
December 31, 2011 12:00 AM | 1535 views | 0 0 comments | 6 6 recommendations | email to a friend | print
“The good news is that the U.S. economy in 2012 isn’t likely to be much worse than this year’s has been. The bad news is that it might not be much better. The most likely outcome for 2012, economists say, is another year of muddling along,” according to a recent Associated Press report.

We don’t know about the rest of the country, but “muddling along” is definitely what’s ahead for Greater Rome and surrounding counties, based on a report released earlier this month by the U.S. Bureau of Economic Analysis. The report shows wages across Northwest Georgia down from 2007, the onset of the recession, through 2010. Declines ranged from a low of 0.3 percent in Polk County to a high of 12.7 percent in Whitfield County. Floyd County registered a modest 0.5 percent decline in total wages and salary.

Many of those wage losses come from the region’s manufacturing sector, which once was a mainstay of local economies across the region.

According the Bureau of Economic Analysis’ report: The manufacturing sector in Floyd County reported a 5.9 percent drop in its manufacturing pay over the past four years, but other Northwest Georgia counties fared much worse. In Catoosa County wages and salary in the manufacturing sector dropped a whopping 35.6 percent. Whitfield County and Walker County each had double-digit percentage declines in manufacturing at 19.5 and 15.5 percent respectively.

The true key to a restoration of Northwest Georgia’s manufacturing sector is closely tied to a rebound in the nation’s housing sector. Until housing rebounds, key Northwest Georgia industries — think carpet and wood flooring, among others — cannot begin to return to pre-recession production levels. And the housing news is not good.

Mark Vitner, a senior economist with Wells Fargo Securities, told the AP there were roughly 2 million homes in foreclosure nationwide, 2 million homes with delinquent mortgage payments and 2 million bank-owned homes that weren’t even on the market. It all puts downward pressure on prices and makes gauging the true supply of homes difficult. “Because of that unknown supply and pressure on home prices, a lot of potential sellers are not putting their homes on the market,” Vintner told the AP. In addition, “builders are holding on to cash” and staying on the sidelines until a clearer housing recovery takes hold.

There was a time, not that many years ago, when upwards of 30 percent of Floyd County employment was in manufacturing. The loss of manufacturing jobs is especially painful because for each manufacturing job that is created, as may as four other jobs are created, says William Steiner, executive director of the Northwest Georgia Regional Commission.

“The truth wealth of a nation is based on its ability to manufacture and export products and quite frankly we’re losing that edge,” Steiner told this newspaper. “If we don’t begin to get it back, this country is going to wind up in a very sorrowful state.”

Beyond manufacturing, workers in both the private and public sectors have faced layoffs and furloughs, both of which act to decrease total wages in the region. For example, Floyd County’s retail sector’s wages and salaries saw a 10.4 percent drop between 2007 and 2010.

While families can deal with salary drops in the 5.9 percent to 10.4 percent range in the short term, economists worry about the long-term consequences. Robert Reich, who served as labor secretary in the Clinton administration, told the AP that whittled-down paychecks will erode spending power and thus lead to fewer sales, weak hiring and stagnant wages, creating a vicious cycle.

Certainly, if the Greater Rome families that have experienced the 5.9 percent drop in manufacturing wages or the 10.4 percent drop in retail wages see those losses continue for too long, the loss of spending power will further hit retailers and the manufacturers of big-ticket items.

We can handle the short-term effects of wage losses. What we should worry about is that stagnant wage power staying around this region too long. Greater Rome and all of Northwest Georgia need to see a rebound in manufacturing.
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