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Home » News » Local/Regional News » Chattanooga: Economy to ...
Tuesday, Dec. 23, 2008

Chattanooga: Economy to pinch pocketbooks

Despite the slowing economy, wage gains for most Chattanooga workers still stayed ahead of inflation last year, according to government figures released Monday.

But workers may not be so fortunate this year and next.

“It’s clearly going to be a time of very weak wage growth,” said Bill Fox, director of the Center for Business and Economic Research at the University of Tennessee. “Everyone is nervous about the economy, and it’s not an environment in which many people are going to go to their boss and be able to demand a pay raise. And most employees paid on commissions are probably going to take home less money.”

The U.S. Bureau of Economic Analysis reported Monday that wages and benefits paid to the typical Chattanooga worker rose 3.7 percent during 2007 while consumer prices, on average, rose 2.6 percent. Despite the wage gain, however, Chattanooga’s average pay of $36,077 was 17.8 percent less than the U.S. average of $43,889 last year.

Among major metropolitan cities in the region, Chattanooga’s average wage rates continued to trail those in Atlanta, Huntsville, Ala., Nashville, Memphis and Knoxville in 2007.

In coming years, Chattanooga’s wage shortfall may narrow, however, with additions planned by higher-paying manufacturers in the region such as Volkswagen of America, Alstom Power and other automotive and nuclear-power producers.

“We’re certainly not immune to the recession, but Chattanooga should fare better than most communities,” Chattanooga Mayor Ron Littlefield said recently.

Volkswagen and its suppliers are projected to generate a total of 11,477 jobs, most of which are expected to pay above current levels in Chattanooga, Dr. Fox said.

In the near term, before VW and its suppliers begin production, workers may not see as big of an increase in their paychecks or pension accounts. The state of Tennessee has frozen wages because of its budget shortfall, and major employers such as Federal Express, General Motors and Eastman Kodak have cut contributions to 401(k) plans.

Richard Ray, president of the AFL-CIO in Georgia, said most workers got only 2 to 3 percent wage increases during 2007 and are facing the prospect of even smaller pay hikes this year and next.

“Workers are struggling to keep up,” Mr. Ray said. “Our members are not only worried about whether they are going to keep their job and paycheck, they are worrying how they are going to keep up with higher food and fuel prices. Everything is tightening right now.”

Across Southeast Tennessee and Northwest Georgia, the new government wage figures continue to show the highest wages are paid in the biggest counties in the region. The average wage paid in Hamilton County during 2007 was $38,087, which was nearly 67 percent more than the $22,857 average wage paid to workers in Grundy County.

Grundy County had the second-lowest average wage rate among Tennessee’s 95 counties, behind only Hancock County.

Grundy County Mayor LaDue “Boo” Bouldin said he believes his county is making improvements, reflected in its 4.3 percent, above-average gain in worker wages during 2007.

“But right now, it’s a tough economy for everyone, and a big share of our citizens have to travel off the mountain (the Cumberland Plateau) to work elsewhere,” Mr. Bouldin said.

The Nashville bedroom county of Williamson had Tennessee’s highest average wage in 2007 at $47,748, while Atlanta’s Fulton County had the highest average wage in Georgia at $59,517 last year.

Among all 3,111 U.S. counties, wages averaged the highest in New York City at $116,977, according to Bureau of Economic Analysis figures.

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