By Dave Flessner

Staff Writer

The Chattanooga area added 6,600 jobs in the past year, helping to cut the local unemployment rate to its lowest winter level in six years, according to the latest figures from the Tennessee Department of Labor and Workforce Development.

But while unemployment in metropolitan Chattanooga remains below both state and national averages, most Chattanoogans still are working for less than other Americans, government figures show. According to the U.S. Bureau of Labor Statistics, the typical Chattanooga worker earned about 20 percent less than the U.S. average in 2004, the most recent year for which comparable data is available.

"There's plenty of work to do, but a lot of businesses are still cutting staff and holding the line on pay to cut their costs," said Terry Massey, a 55-year-old truck driver from Ooltewah who says he usually makes $25,000 to $30,000 a year hauling freight on his daily routes from Chattanooga. "It seems like everybody is working harder, but most of us aren't getting that much ahead."

State economists said wage increases for most workers beat inflation in the past year, but rising health care and energy costs are cutting into many workers' take-home pay.

"The labor market is tighter in many areas, so we are seeing some bigger increases in wages for a lot of workers," said Matt Murray, associate director of the Center for Business and Economic Research at the University of Tennessee. "But the average production worker, especially in lower-skilled jobs, still has lost ground in the past 20 years."

The gap between the highest-paid and lowest-paid workers and the wealthiest and poorest communities in Tennessee has widened over time, he said.

"The rich appear to be getting richer, especially at the very top of the income distribution," Dr. Murray said. "But workers in lower-skilled jobs that can be automated or the work shipped overseas are seeing very little, if any, wage growth."

Pay levels in Chattanooga tend to be lower than in the state's other major urban areas because of Chattanooga's relatively higher concentration of lower-paying jobs in retail and tourism businesses and nondurable manufacturing industries, including textiles and food processing, state records indicate.

Chattanooga's per capita income averaged $3,500 less than the rest of the country and ranked fourth among Tennessee's five major metropolitan areas in the 2004 data. Only the Tri-cities metro area of Johnson City, Kingsport and Bristol had lower average incomes, according to the Bureau of Labor Statistics.

But even among similar jobs, salaries tend to be lower in Chattanooga.

In a 2005 comparison of pay for similar jobs, the bureau found less than 13 percent of all occupations in Chattanooga pay more than the national average. Above-average pay was earned in Chattanooga by ministers, pharmacists and law clerks, among others, bureau wage figures indicate.

UNION IMPACT

Workers represented by labor unions also tend to be paid higher wages. Larry Ezell, a unionized boilermaker for Alstom Power Co., credits both his employer and union for his above-average pay of $21.43 an hour.

"We have a good union, and this is a good job," he said.

Jerry Lee, president of the Tennessee AFL-CIO, estimates that unionized workers in Tennessee make about 30 percent more than their nonunion counterparts. But the share of workers represented by labor unions continues to decline and is only half the U.S. average in right-to-work states like Tennessee and Georgia.

Mr. Lee said nearly all workers are being asked to absorb higher deductibles and copays for health insurance and that many employers continue to limit wage increases.

"Wages are pretty stagnant across the board," he said. "Health care costs are devastating wage gains for a lot of workers."

IMPROVING OUTLOOK

A survey released last week by the National Association of Colleges and Employers indicates college graduates also should fare better this spring than last. Starting salary offers to graduates in the business disciplines increased across the board. Marketing graduates posted the biggest increase among the business fields with a 10.3 percent jump in average starting pay to $41,285, NACE said.

Computer science graduates saw their average offer go up only 2.5 percent, but the $52,177 starting pay was among the highest for college grads.

The national survey results mirror the demand for graduates from the University of Tennessee at Chattanooga, according to UTC Placement Director Jean Dake.

"The job market continues to improve," said Ms. Dake, who cited a 14 percent increase in the number of employers at the university's five career days. "We continue to see strong demand for those in most education and health fields and somewhat better demand this year in engineering and business."

Ms. Dake said students with work or internship experience along with their degree are landing the best jobs in the improving employment market.

In February, the most recent month for which figures are available, the state estimates that the jobless rate in Hamilton County fell to only 4.1 percent, the lowest February rate since 2000. A recent survey of area employers by Manpower Inc. found that 23 percent of Chattanooga employers surveyed said they plan to hire more workers this spring, while only 3 percent said they expect to reduce their payrolls.

In such an environment, employers trying to hire skilled workers in high-demand fields face a tougher challenge.

"We are having some difficulty finding the quality and quantity of workers we need for skills such as welding and machinists," said Rob Sentell, human resources manager for Alstom Power Co.

WAGE TRENDS

Alstom negotiated raises of about 3 percent last month with its unionized boilermakers and machinists, Mr. Sentell said.

Across the Tennessee Valley, most employers are raising wages 2.5 percent to 3.5 percent, according to TVA surveys of area employers. Phil Reynolds, vice president of human resources at TVA, said the utility has replaced 30 percent of its work force in the past five years and could be forced to find a comparable number of replacement workers in the next decade to replace retiring baby boomers.

"It's a constant challenge for us to find qualified people in key positions," he said. "It could be especially difficult to find the skilled craft workers we need to build more power plants if all of the utilities go ahead with their building plans."

Lower-paid workers may get some help this year from Congress, which continues to debate raising the minimum wage for the first time in more than a decade. While few workers make the minimum wage, the proposed raise to $7.25 an hour over two years could affect many Tennesseans directly and indirectly help swell the paychecks of many working at wages just above the new floor.

Although he expects a slower rate of jobs growth during the rest of 2007 for Tennessee, Dr. Murray also expects local wages to increase a bit more this year than last.

Many manufacturers say they are squeezed by having to raise wages to compete for workers in a tighter labor market while having to hold the line on the price of goods because of growing competition in the global market.

"It's a tough environment," said Ray Childers, president of the Chattanooga Manufacturers Association and a former personnel director at DuPont. "Companies are having to control their costs while trying to attract more workers with the knowledge, skills and will to do what is required today to compete in a global economy. In the past, you could survive with an average work force, but the rate of change and competition today is such that you have to have workers that you can train and retrain for exceptional performance."

E-mail Dave Flessner at dflessner@timesfreepress.com

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