Pay Increases in 1988 Will Continue 5-Year Trend of Southland Firms’ Limiting Hikes, Study Says

Modest salary increases are in store for workers in Orange County next year, but the raises won’t reverse a five-year trend by employers in eight Southland counties to limit pay increases, according to a survey released Wednesday by the San Diego office of Wyatt Co.

The survey of 400 Southern California companies shows that employers plan to provide salary increases averaging 5.3% to 5.6% in 1988--the fifth straight year that average raises have declined. The percentage increases will be about the same for workers as for supervisors, Wyatt said.

In addition, actual increases received by workers have been running about 0.2% below the amounts initially projected by their employers, said James Finkelstein, president of the worldwide wage and benefits consulting firm.

While average pay increases are getting smaller, Finkelstein said, inflation is expected to remain next year in the range of 3% to 4%.

“Their figures confirm trends we’ve been seeing in the Orange County annual survey in recent years and what other economists have been seeing,” said Mark Baldassare, a UC Irvine associate professor of social ecology.

Baldassare’s annual survey, conducted through UCI’s public policy research organization, is scheduled to be released today.

James Doti, dean of the Chapman College school of business, said the county’s income growth rate has been increasing slower than the national average.

“The reason is that Orange County has relatively high housing costs and has lost higher-paying and highly skilled jobs while adding or retaining part-time, lower-paying and lower-skilled jobs, primarily in tourism, restaurants and other jobs that can’t move out of the county easily,” Doti said.

While Baldassare and Doti base their statistics on total income, Wyatt’s salary figures do not include benefits, wages set by union contracts or other forms of compensation, such as bonuses.

The Wyatt figures are divided into three categories--top executives; supervisors and other employees who are exempt from mandatory overtime pay under federal wage and hour laws, and those workers who are non-exempt and therefore receive overtime pay.

In Orange County, non-exempt employees can expect an average 5.2% pay increase in 1988, while exempt employees and executives will receive and average 5.3% raise next year. This year, non-exempt workers and top management received increases averaging 4.8%, while exempt employees received an average of 4.9%, the Wyatt survey shows.

“These differences may seem small, but spread over hundreds of millions of dollars in payroll, they have a significant influence on the buying power of workers in the region,” Finkelstein said.

Orange County salaries in 1985 and 1986, however, rose at least 6% each year, Wyatt said in its survey.

Finkelstein attributed the trend toward lower increases to low inflation and a tendency he characterized as “keeping down with the Joneses.”

Accept the Idea

Low inflation has meant that employees generally accept the idea that employers have less money to work with, he said. Meanwhile, he said, companies are conducting salary surveys and finding that competitors are holding down salary budgets, too.

Finkelstein noted that some employees are frustrated with the trend because the prices of their own basket of goods and services--homes, cars, food and other expenses--continues to climb.

“What’s also frustrating is when employees see other employees getting increases they believe aren’t deserved,” Finkelstein said.

“The frustration is that employers are tolerating poor performance rather than dealing with the poor performers. That’s something employers are going to have to work on.”

Slightly Lower

The Wyatt survey shows that pay increases in Los Angeles and Ventura counties are expected to be about the same next year, while raises in San Diego, Imperial, San Bernardino, Riverside and Kern counties will be slightly lower.

The biggest boost of all--6.1%--is predicted for executives in San Diego and Imperial counties, where top managers are receiving 6.3% more this year.

Overall, the biggest increases are projected in the financial services industries and in the services sector, and the smallest increases are expected in utilities, retailing and education.

“We also found that increases at smaller companies will be better than the increases offered at large companies,” Finkelstein said.

PROJECTED 1988 SALARY INCREASES

Salaries in Orange County are expected to increase modestly next year, according to an annual survey by Wyatt Co. The company said Orange County’s increases are expected to be about average for Southern California, but behind the projected rises for San Diego and Imperial counties.