Wage gap remains high in Virginia

By LOUIS LLOVIO
Media General News Service
Published: September 16, 2008

The wage gap remains high among Virginia workers, with many earning far less than the average worker’s contribution to the economy, according to a study by The Commonwealth Institute.

The study, to be released this morning, examines wages and productivity in the state. The Richmond-based institute is a research organization created by Virginia social-services groups.

In 2007, the highest-paid workers in Virginia earned an average of $39.89 an hour, compared with $7.97 for the lowest earners. Both groups saw increases from the previous year, when top earners made $38.36 an hour and the lowest made $7.64.

On average, Virginia workers produced goods and services worth $64,817 in 2006, so many workers’ productivity outpaced their earnings.

In the Richmond area, the study found that the average weekly wage was $856, the second-highest in the state. That compares with $1,163 in Northern Virginia—the highest in the state—and $582 in Danville, the state’s lowest.

The study found that about 18 percent of jobs in the Richmond area were in the government sector, with an average weekly wage of $946. The retail sector had the second-largest number of workers, with 70,116 jobs paying an average weekly wage of $474.

The wage gap is exacerbated by other factors in the economy, such as rising gas and energy prices, said Michael Cassidy, one of the study’s authors.

While core inflation was 2.3 percent during the first six months of 2008, the study said inflation for food was 6.6 percent and energy inflation was 29.1 percent. Cassidy said those types of increases are expensive for everyone but are tougher on those making less.

“We’re seeing the lowest-paid workers starting to feel a pinch,” he said.

Also contributing to the general malaise for those workers is access to health care, Cassidy said.

According to Census Bureau data, the study reported that 61.9 percent of workers were offered insurance through their employers, down from 66.9 percent in 2006. And they paid more for the insurance, with average premiums for families up to $11,400 in 2006 from $10,300 in 2005.

Part of the problem with the wage gap is the amount and type of work available in Virginia.

According to the study, while the state has seen better job growth than the rest of the country for 16 years, job creation fell below the national average in 2006 and 2007.

Job growth last year was less than 1 percent, compared with 1.69 percent in 2006 and 2.25 percent in 2005, the study said.

Job growth, even during more prosperous times, occurred mostly in education and health care, followed by hospitality. Manufacturing and information technology saw job losses, with one in five manufacturing jobs and one in nine IT jobs leaving the state between 1999 and 2007, according to the study.

Greg Wingfield, president of the Greater Richmond Partnership, a regional economic development group, said his organization is working on closing the gap by luring technology, finance and insurance companies that pay a higher wage.

“By targeting these fast-growing [industries] with better-paying jobs,” in five years the gap could begin to narrow, he said.