Wages, salaries up in Valley despite economy

Despite the harsh economic conditions that have plagued Valley businesses this past year, wages and salaries managed to steadily increase, according to the U.S. Department of Labor.

The report, released by the department's Bureau of Labor Statistics, said workers received a 4.4 percent jump in earnings during a fiscal year that ended September 2008.

Among the 14 metropolitan areas for which the figures are available, the Phoenix metro area ranks second - behind Philadelphia - for the highest percentage change. Nationwide, wages and salaries grew by an average of only 2.9 percent.

"The Phoenix area is holding its own in compensation when compared to some of the other metro areas," said Todd Johnson, an economist with the Labor Department. "Based on the data, other cities seem to have had more layoffs in better compensated positions."

The bureau's findings were puzzling to many Valley business leaders.

Dennis Doby, research administration senior director for the Arizona Department of Commerce, said Arizona's economy has "endured a number of woes in recent months." His department released an employment report Thursday that said Arizona's jobless claims hit 30,000 in October, the highest it's been in three decades.

"The (wage and salary) increase doesn't make a lot of sense to me considering we just released a study that showed losses in many well-paying industries," he said, pointing to the thousands of construction jobs lost in the past year.

Ann Seiden, spokeswoman for Arizona Chamber of Commerce and Industry, said a possible explanation could be that having fewer employees means that there are fewer employees to spread compensation across.

"With a smaller work force and a lack of growth rate, businesses could be adjusting salaries," she said.

In addition to salary jumps, total compensation costs paid by employers, which include health and disability insurance, spiked 4.5 percent in the Phoenix-Mesa-Scottsdale area.

The increase was well above the 2.8 percent national jump.

Lois Yates, vice chairman for economic development at the Mesa Chamber of Commerce, attributes the percentage surge to an increase in health care costs.

"Chamber members have talked about health care costs as a big ticket item," she said. "Many of them are small business owners. And they're having a tougher time paying off those larger bills."

But as far as an increase in wages and salaries are concerned, Yates is equally as perplexed.

"It's a little strange," she said. "Each community has been hurt pretty badly this past year."