Bay Area Wage Trends Promising, Study Shows

Contra Costa Times - September 4, 2005

Bay Area Wage Trends Promising, Study Shows
Demand for health care professionals creates higher salaries; pay for technology workers reflects resurgence

By George Avalos

Many East Bay health care professionals are enjoying robust growth in their wages. But lawyers and other legal workers are not. And don't be so sure the boss gets a fat pay raise every year.

Those are some of the trends that have emerged from the state's most recent survey of hundreds of occupations in the Bay Area and around California.

Overall, wage growth in 2005 is looking far more healthy than it did in 2004, according to an analysis of the survey by the state Employment Development Department.

If the trends hold up, that would point to an improving job market in the battered Bay Area. And it would be a welcome reversal of the economic calamities that began with the implosion of the dot-com bubble.

In the East Bay, average wages for all employees rose 3.7 percent over the 12 months that ended in March 2005. In 2004, wages rose a scant 1.4 percent over the year.

Wage growth also looked strong in the Bay Area's other urban centers. Average wages rose 4 percent in Santa Clara County in the most recent one-year period that ended in the first quarter of 2005, compared with a 3.5 percent increase in 2004. Wages in the San Francisco-San Mateo-Marin region were up 3.3 percent in 2005 compared with a 0.7 percent rise in 2004, the EDD survey showed.

"At least now we are seeing some job gains and wage gains in the East Bay and elsewhere in the Bay Area," said Tapan Munroe, a Moraga-based economist and a director with LECG Corp., a consulting and research firm in Emeryville. "That certainly bodes well for the economy here."

Another encouraging trend: Wages across the East Bay appear to be staying ahead of inflation. While wages were rising an average of 3.7 percent in the Bay Area's three major urban centers, consumer prices were up 1.1 percent. That suggests that in real terms, the average employee in the Bay Area and the East Bay has managed to stay ahead of inflation.

Despite the improvement, some labor officials remained concerned that employees in the Bay Area continue to struggle.

"While it's encouraging that we are seeing some upward trends in wages for the Bay Area, those numbers can be misleading," said Chloe Osmer, an official with the Oakland-based California Labor Federation.

That's because rank-and-file employees must wrestle with sharply rising expenditures on multiple fronts in the Bay Area, she said.

"Working people are seeing a lot of increases in costs," Osmer said. "Health care costs are going up. Home prices are up. There are big increases in the price of day-to-day items such as gasoline."

Despite those qualms, wages in the Bay Area are on the upswing. And in some red-hot occupations, workers can command big raises.

Health Care Workers

Health care practitioners and technicians are one group of workers who have captured that sort of increase in paychecks.

In the three main urban centers of the Bay Area, wages for health care practitioners rose an average of 7.9 percent from early 2004 to early 2005. East Bay health care practitioners gained an average 8.1 percent in their wages.

"We're seeing a classic supply and demand curve for the health care and computer marketplaces," said Steve Pogorzelski, president of Monster North America, an employment services firm. "Companies need to hire to sustain their growth. They can't rely on productivity alone. So they have to hire people and pay them a lot more money when those people are in demand."

Pharmacists enjoyed the fastest gains among health care practitioners as their average wages soared nearly 21 percent. Veterinary technicians hauled in a 17 percent gain in wages over the year.

"We have growing demand for labor in many of our occupations," said Ron Bickert, a Livermore-based director of human resources with ValleyCare Health System. "Pharmacists, radiologists, and ultrasound, MRI and mammography technicians are in short supply."

But the most acute problems -- primarily because of the huge numbers involved -- come in perhaps the most visible, or at least the most familiar, position in the hospital.

"Nationwide, the worst shortage is for nurses," Bickert said. "The need is growing faster than the supply of nurses. The educational institutes here can't turn out nurses fast enough. That's why wages are going up."

Many medical centers have begun to scout for nurses in Canada, England, Australia and the Philippines. Some search firms have begun to act as head hunting firms for nurses.

"It becomes a bidding war for talent," Bickert said.

ValleyCare, in a joint effort with Las Positas Community College, has opened its own nursing school to attempt to put a small dent in the problem. About 10 nurses earlier this year came out of the first class.

"This has potential to go up to 50 maybe 60 nurses a year," Bicker said. "But you also have to get teaching staff. You need nurses who can train nurses." Other health care systems are headed toward similar kinds of nursing school arrangements, Bickert said.

Although many health care occupations offer fast-growing wages to workers, some of the best-known medical professionals are struggling.

General practitioners and family doctors brought in a 7 percent gain in wages over the year, but that was below the average growth for the overall category of health care practitioners. Dentists had a 2 percent wage gain. And optometrists had no change in wages.

Podiatrists were hardest hit, suffering a 42 percent decline in their average wages. Veterinarians, emergency medical technicians and paramedics, chiropractors and recreational therapists were jolted with double-digit declines in their wages.

Christy Boyd, a physician who is the principal owner of Livermore-based Varsity Sports Medicine, said she realizes huge gains in her paycheck might not be in the cards. That has been the trend for general physicians in recent years.

"More and more people nowadays go into medicine knowing they are following a passion and not really following an income," said Boyd, who grew up in Pleasanton and wanted to establish her practice in the Tri-Valley.

The average East Bay salary for general practitioners in the East Bay is about $152,500. And the average Bay Area salary is $138,422. Nevertheless, Boyd sees an altered landscape for her profession in recent years.

"In the current medical reimbursement world, physicians can make a very good living but nothing what they could have 10 or 15 years ago," Boyd said. "My generation of physicians has a different expectation going into medical training."

Boyd seeks professional satisfaction in other ways.

"I definitely took a big step and a gamble in opening up a private practice," Boyd said. "For me, the quality of my practice and patient reactions makes up for any changes in income."

The EDD data also revealed that attorneys are not necessarily raking in the big bucks as they have in years past.

Attorneys

While the average annual salary for a Bay Area lawyer is a hefty $141,000, wages for attorneys in the region slumped 2.5 percent during the year. Wages for East Bay lawyers rose a puny 0.7 percent, but wages for lawyers in the San Francisco area fell 6.7 percent and in Santa Clara County they dropped 1 percent.

The salary struggles for attorneys have hurt wages throughout that industry. The legal profession saw wage reductions in all three urban centers of the Bay Area during the year.

"After the dot-com crash, the law profession went with that industry," said David Broman, chief executive officer with Lafayette-based Syzygy Consulting Group, which provides advice on compensation issues. "There is just not a market for entry-level attorneys as there used to be."

The highest-paid attorneys are in the South Bay, with an average salary of $158,000. East Bay attorneys were the lowest-paid of the bunch, with an annual salary of nearly $125,000. The San Francisco area average wage for an attorney was about $140,000.

"The salaries for attorneys are significantly higher in Silicon Valley and San Francisco, which probably reflects the influence of larger law firms," said Stephen Bundy, who teaches legal ethics at UC Berkeley's Boalt Hall. "The East Bay probably contains a much higher mix of small-firm lawyers and solo practitioners."

Bosses also encountered a rocky landscape for wages.

Employers

Management employees brought in only modest gains in pay during 2005 compared with the previous year. Management wages rose an average of 2.3 percent over the year, which was below the average wage gain for the entire Bay Area, 3.7 percent. The average management wage in the Bay Area was about $112,000, ranging from a high of $123,000 in the South Bay to a low of $103,000 in the East Bay.

Yet it might not be necessary to shed a lot of tears over management salaries. The average manager in the Bay Area harvested an annual wage that was more than twice the pay of any Bay Area worker.

"There is still a huge disparity in worker and CEO salaries," labor official Osmer said.

One of the most surprising, and encouraging, trends to arise from the EDD wage review is in the technology sector.

Technology Employees

Wages for computer and mathematics jobs rose 5.6 percent in Santa Clara County and by 7.2 percent in the San Francisco region.

"The high-tech industry in the Bay Area is starting to come back," economist Munroe said. "The higher wages are part of the revival and resurgence of the Bay Area economy."

Still, some analysts cautioned that the tech sector can't party like it's 1999 just yet.

"Technology companies are hiring people and bringing them in and paying them more money, but people are not getting crazy increases in pay by any means," wage consultant Broman said.

EAST BAY AVERAGE WAGES

These are the average wages for people in major East Bay job categories, ranked by the highes average annual wage in the first quarter of 2005.

George Avalos covers the economy, financial markets and banks. Reach him at 925-977-8477 or gavalos@cctimes.com.