The Orange County Register Jonathan Lansner column

July 09--One skill that today's top executives clearly master is the art of labor-cost management.

Which is why, when you ask whether workers are in line for a raise anytime soon, the response is likely to be, "What's a raise?"

Job data show Southern California bosses are hiring at the quickest pace since the turn of the century. So, you'd think that push for bodies would convert into upward pressure on wages.

But some fresh government employment data shows wages were falling as 2013 ended. This report, based on detailed information in unemployment insurance filings -- compared to the widely discussed monthly jobs data from limited surveys -- is the most complete look into employment patterns. Unfortunately, that detail comes with a price -- a six-month lag.

According to the math from the newest Quarterly Census of Employment and Wages, at the end of 2013:

--Los Angeles employers grew employment by 5.6 percent in three years. Still, average annual pay fell 1 percent last year -- the first drop since the 2009 recession year.

--In Orange County, job count was up 6.1 percent in three years, but average annual pay fell 0.4 percent last year -- also the first dip since the recession.

--Inland Empire bosses boosted payrolls by 7.1 percent since 2010, but wages rose just 0.6 percent in 2013 -- the slimmest advance since the recession.

--Same story in San Diego: Employment up 6 percent, but 2013 wages were up just 1.5 percent -- the smallest raise since 2009.

Just so you know, it's not only a local pattern. Nationally, job counts rose 4.8 percent in three years but 2013 pay was up just 1 percent.

Please don't think this is just a statistical fluke where the average falls when the firms doing the hiring are primarily in lower-paying industries. My trusty spreadsheet tells me that skimpy raises are a broad-based phenomenon.

Regionally, major employment categories with falling salaries in last year's fourth quarter had payrolls equal to 60 percent of all employees in Los Angeles; 82 percent of Orange County's jobs; and 78 percent of San Diego's workforce.

So, why no fat pay raises in 2013, which otherwise could be considered an expansionary year for the business climate? It's probably a mix of these factors:

--Flexibility. The hiring itself could be to blame, as numerous companies for the first time in years had the staffing depth to cut hours for all workers.

--Choosy bosses. Extended job growth may have boosted the supply of workers bosses can choose from as some hard-core unemployed folks who had given up looking for work returned to job seeking.

--Costs. Benefits are pricier, forcing bosses to shift labor dollars. According to another government benchmark, the national Employee Cost Index, wages have averaged 1.6 percent annual growth the past four years while benefit expenses have climbed at a 2.8 percent annual pace.

--Temps. Continued use of outside staffing firms and growing use of part-time work, as companies look to continue to maximize each labor dollar -- and in some cases avoid paying for benefits.

--Youth. Companies in growth mode may be adding more entry-level, cheaper workers. At the same time, numerous employers are still cutting more veteran, better-paid staffers. That, and an aging population, is creating more retirees.

--Employee fear. People are still simply happy to have a job -- and have been well-trained since the Great Recession began to not ask for a raise.

The limited pay hikes explain a good deal about the split personality of the region's economic recovery.

While the recovery is certainly in gear, three years of significant local hiring has not greatly altered what could be described as a kind of economic siege mentality among local consumers. That economic angst can be felt at many income levels. Job anxiety explains everything from continued demand for coupons and discounts to empty office buildings to sluggish homebuying.

You'd think more bosses would see the value in paying higher salaries, especially as the job market turns more toward the worker's favor.

Hiring has become a challenge, with job openings up 10 percent nationally this year through May, vs. 2013, according to another government jobs database. Bosses seeking workers is at the highest level since 2007. And more workers are walking -- quits are up 11 percent through the first five months of 2014, as voluntary separations hit a six-year high.

Bosses will argue they're being conservative with salaries due to profit pressures from competitors; investment demands from ownership; and business-condition complexities. But those people with hiring authority, especially in industries dealing directly with consumers, must also be aware of the vicious chicken-or-egg economic cycle.

Without fatter wallets, consumers won't supply the shopping oomph needed for bosses to justify spending more on labor.

Contact the writer: 949-777-6727 or [email protected]

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