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COMMENTARY

Why new hires in Buffalo Niagara are seeing earnings grow

David Robinson

With Labor Day fast approaching, some of the happiest workers are likely to be the ones who just got hired.

That’s because earnings for new hires – a group that includes people who are starting their first job and those who are moving from one job to another – have been rising almost three times faster than inflation since 2010.

Just as impressive, that earnings growth has been almost double the overall increase in pay for all workers in the Buffalo Niagara region.

“It’s an improving economy,” said John Slenker, the state Labor Department’s regional economist in Buffalo, who discovered the trend by analyzing earnings data from the U.S. Census Bureau.

And for workers in new jobs, it’s an improved paycheck.

• Earnings for new hires have grown by 30 percent from the beginning of 2010 through the beginning of 2016. That’s more than double the 14 percent increase for all new hires statewide.

• The growth in earnings for new hires, which averages out to be around 5 percent a year, is almost double the increase across the entire Buffalo Niagara workforce.

The earnings growth was remarkably consistent for almost all new hires.

• New hires of all races shared in the higher earnings. Asian workers had it the best, with a 42 percent rise in earnings, while black workers had the smallest gain, at 26 percent, although even that wasn’t far off the Buffalo Niagara average.

• The earnings growth was strong for young workers and older workers who started new jobs, but not as much for middle-aged workers. Earnings growth topped 29 percent for every age group of workers under the age of 35 and above the age of 54. Earnings growth for workers 35 to 54 ranged from 13 percent to 21 percent.

• New hires with all types of education also benefited from the increase, with the one exception being men with bachelor’s degrees.

Slenker thinks that’s because many men went back to college during the recession and started new careers. That could include, for instance, a factory worker whose job was eliminated going back to school to become a nurse.

Those new jobs possibly paid better than their old positions, but collectively, they may not have paid as well as some of the higher-paying occupations, such as engineering, that traditionally have skewed average earnings for that demographic group higher.

• The rising earnings for new hires reflects two things: Higher wages and longer hours.

“You’ve got some pressure on wages, but a lot of it is from working additional hours,” Slenker said.

Average wages for all workers here grew by 17 percent during that same six-year period, or just under 3 percent a year. So for new hires to earn more than that, they had to have worked longer hours as the economy pulled out of the recession and began its long, slow expansion, Slenker said.

Part of that likely is due to the shrinking local labor pool, caused by a stagnant overall population and a wave of retirements among baby boomers. That’s made it harder to find new workers, so it’s likely that many employers are having their workers put in longer hours to make up for the difficulty in hiring.

And remember, there are a lot of new hires, with 120,000 to 140,000 people starting new jobs each year.

The upward pressure on wages is continuing, too. Increases in the minimum wage, coupled with employers like Amazon and Whole Foods offering $12 an hour to newly hired part-timers, is pushing up wages at the bottom end of the pay scale. Companies like Panasonic offering $14 an hour for entry-level manufacturing jobs are raising the floor on factory work wages.

“What that’s telling me is that the competition for labor in upstate New York is becoming very tight,” Slenker said. “That’s good for workers.”

David Robinson is deputy business editor for The Buffalo News. He writes a weekly column on Buffalo's business.

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