Workers Stuck As McLean County Wages Lag State, National Trends | WGLT

Workers Stuck As McLean County Wages Lag State, National Trends

Jun 20, 2019

McLean County’s consistently low unemployment rate has long been a point of pride. (Thanks, State Farm and Illinois State University.)

Yet the jobless rate doesn’t tell the whole story of what it’s like to live and work here.

Wages in McLean County aren’t rising as fast as they are statewide or across the country, U.S. Bureau of Labor Statistics data show. The average weekly wage in McLean County (now around $1,014) has grown just 2.8% in the past three years, and just 17% in the past 10 years, according to the U.S. Bureau of Labor Statistics. That’s less than both the state and national increases over that same time.

And wage growth has been slow in Bloomington-Normal’s most important job sectors. For Financial Activities workers (working at companies like State Farm), wages in McLean County have grown 26% in the past decade, BLS data show. But statewide and nationally, Financial Activities workers saw wages grow by at least 36%. It’s the same disparity for Retail and Leisure & Hospitality workers.

Wage growth has been unusually slow across the country since the Great Recession, only recently showing 3% annual increases. That’s defies a fairly conventional economic theory: As the unemployment rate falls and the labor market tightens, wages are supposed to go up.

“Economists have questioned that quite a bit,” said Mike Doherty, an Illinois Farm Bureau economist who has studied the Bloomington-Normal economy. “Wage growth has been very tepid.”

Wages are at the core of economic growth, Doherty said. Other parts of the economy feel it when wages don’t rise, he said. Rents don’t increase. Property values stay put.

“Without wage growth, you could feel some localized stagflation. You have some price increases, but you’re not able to pass on those price increases as easily because of the lack of wage growth,” he said.

Farewell, Baby Boomers

Why are wages here rising more slowly than other places? There’s no one answer.

Recent changes at State Farm are likely a factor. A major reorganization in 2017-2018 led to hundreds of job cuts, relocations, and retirements locally. The Bloomington-based insurer says other positions are moving in, keeping the total local workforce steady at around 15,000. But it’s unclear what those workers earn compared with their predecessors.

Illinois Farm Bureau economist Mike Doherty.
Credit Charlie Schlenker / WGLT

In 2017, the average weekly wage in McLean County actually fell slightly, even as wages rose 2-3% statewide and nationwide. (The Economic Policy Institute pegs the ideal annual growth target for nominal wages at 3.5% to 4%.) Doherty said local wages were dragged down most by the Financial Activities sector, aka State Farm.

“The changes at State Farm in particular, and with our ag sector having a little bit of a struggle that last few years, that could create some chaos in the market,” said Zach Dietmeier, vice president for marketing and communications at the Bloomington-Normal Economic Development Council, noting “transfers, early retirements, and payouts at the corporate level.”

Baby boomer retirements are another factor.

“If you have a lot of people at a high salary range at a national corporation headquartered in your town, and those people are retiring at salaries of above $100,000 or even in the $200,000s, and they’re replaced with (people) in much lower salaries for very similar amount of work being done in that company,” Doherty said, “that’s what we think is happening to some extent nationally with the low wage growth we’ve seen across the U.S.”

Zach Carlson with the Bloomington-Normal chapter of the Democratic Socialists of America has studied the wage issue and is troubled by the proliferation of lower-wage jobs.

“You can really see it here locally. Especially when (companies) like Mitsubishi leave, and more service-sector jobs come in—the Portillo’s, the Pancake House.

It may not be the same workers, but they’re trying to cushion those jobs, but it’s just not the same wages or same benefits,” said Carlson.

Low-wage workers can bounce from job to job without ever finding stability, said Jay Shannon, director of Project Oz’s youth employment program.

“Having a job that can make a living wage is a little bit different. Having that opportunity to find a sustainable job is sometimes where the struggle lies,” Shannon said.

Project Oz Community Youth Employment Program Director Jay Shannon, left, with client Tre Whitelow from Bloomington.
Credit Ryan Denham / WGLT

Tre Whitelow, 22, of Bloomington, was one of Project Oz’s clients. The current Illinois minimum wage is $8.25 an hour. But it costs at least $750 a month to find a decent studio apartment in Bloomington-Normal, Whitelow told GLT earlier this year. That math can be crushing.

“You can’t really keep up with your family off McDonald’s unless you’re like a manager or supervisor. Being a crew leader or crew member, at $8.25, you’re really not making over ($300). So your rent—that’s two checks if you’re working McDonald’s,” said Whitelow.

Fragile Households

The so-called living wage in McLean County for a household with one adult and two children is $29 an hour, well above the minimum wage, according to MIT’s Living Wage Calculator. That living wage estimate takes into account childcare, housing, and other costs. 

Government assistance is often left to fill the gap. 

In response to increased need and today’s average rents, Normal Township leaders in 2017 decided to increase emergency assistance amounts for rent from $375 to up to $950. The township’s budget for emergency shelter assistance has jumped from $45,000 to $90,000 a year.

Families relying on low-wage jobs are often in a fragile financial position when emergency strikes, said Normal Township Supervisor Sarah Grammer.

"Life happens the same for people who are working those limited-hour, no-benefit jobs."

“Life happens the same for people who are working those limited-hour, no-benefit jobs as those of us in full-time jobs with benefits. They lose family members. There are funerals to attend, or parents in the hospital, or children who get sick and can’t go to school,” Grammer said. “When your employment doesn’t have anything built in to cover you, you end up with a loss of employment.”

We’re too hung up on the unemployment rate as the No. 1 workforce data point, said Doherty. 

“It’s a lot of people who are patching together hours and hours of low-paid work at various places, trying to make ends meet. So when you’ve got the need for one person to work so many places at once in order to pay their bills, you’re gonna have quite a few of your jobs covered, and a low unemployment picture,” said Grammer, who also recently helped open a food pantry at ISU

Local economic development officials have high hopes for companies like Rivian and Brandt—two manufacturers that have begun staffing up at their McLean County plants. Both received local tax breaks in exchange for those jobs, and those incentives are partially contingent on the new hires making at or above the “average weekly salary” (Rivian) or “mean hourly wage” (Brandt) for the area. 

Incentives should only be offered to employers who bring in median or above-median wages, Grammer said. 

“If we offer tax incentives to hotels and restaurants, what we’re doing is incentivizing those low-wage jobs. Not to say people don’t need that work, or we don’t need those services in our community. We certainly do. But if that’s what we’re incentivizing with our tax dollars, that’s what we’re gonna have a lot of,” she said.

Friction can still happen. Local unions recently criticized Rivian for using low-wage and out-of-town workers for remodeling work at the plant. Their tax-break agreement doesn’t prohibit that. 

Illinois workers will get some relief in the coming years. Illinois’ minimum wage will inch up annually from $8.25 now to $15 in 2025

“It’s definitely going to help a lot of people,” said Carlson, with the DSA. “A lot of people will have more breathing room. The living wage locally is about $23. We’re not getting there yet, but it’s progress.” 

There are some encouraging signs in preliminary wage data for McLean County in 2018. Average weekly wages were up 2.9%—the highest in five years, yet still short of the state and national trendline.

And in the Health Care and Social Assistance sector—including hospital workers—McLean County’s wage growth has actually slightly outpaced the state and U.S. It’s up 18.4% in the past 10 years, though it’s unclear why. Officials with OSF HealthCare and Advocate Health Care were not available for comment for this story.

“Numbers are looking at least stable,” Dietmeier said. “But it’s a really a microcosm of what’s happening at the national level, with so much business uncertainty.”

GLT’s Charlie Schlenker contributed to this story.

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