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Region sinks in low-wage economy

Published:February 28, 2010, 6:50 AM

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Updated: August 21, 2010, 4:53 AM

Forty years ago, you’d see the face of the Buffalo Niagara economy at the Bethlehem Steel mill or the General Motors engine plant.

Those good-paying factory jobs formed the backbone of our economy, paying solid wages that allowed thousands of local households to enjoy a comfortable standard of living, even on just one income.

Today, it’s much different. Bethlehem Steel is long gone and the engine plant has withered to a shadow of what it once was. Factory jobs, once so plentiful, now account for only a little more than one out of every 10 positions in the region.

As a consequence, the middle class in the Buffalo Niagara region is feeling a tight squeeze, as the factory jobs that are going away are largely replaced by work that doesn’t pay nearly as well.

Now, the face of the local economy has an entirely different look these days, and it’s not nearly as pleasing to see.

Kathryn A. Foster, the director of the University at Buffalo Regional Institute, sees an ever-growing face of economic uncertainty in the region, made up of people like cashiers, child care workers, hotel clerks, preschool teachers, security guards and bus drivers.

That’s because nearly one of every two jobs—46 percent to be precise—pays $30,000 a year or less. They are the fastest-growing part of the local job market, expanding by 17 percent from 2004 to 2008. One of every four local jobs is in an occupation with a median average wage of less than $22,050, which also is the federal poverty line for a four-person household.

“That was stunning to me,” said Foster, one of the authors of the institute’s new report on the growing low-wage economy. “You’ve got people feeling like they’re stuck, like they’re falling. It’s not just a feeling. It’s a reality.”

At the same time, the middle class— those with jobs paying $30,000 to $70,000 a year—is shrinking, with 10 percent of those positions vanishing during that same four-year period. The best jobs—those paying median annual wages of $70,000 a year or more—grew by 6 percent, but they’re hard to find. Only one job in 12 pays that much.

Still, Western New Yorkers are scratching and clawing and finding ways to maintain their standard of living. Peter

A. Lombardi, a research fellow at the UB institute, said we still have the same expectations for the standard of living our parents enjoyed, even though low-wage jobs often are the only employment option for many Western New Yorkers.

Holding two or more jobs is one way local families keep their collective head above water. Nearly two of three women in the region work, and 60 percent of local households with at least three people have at least two wage earners.

As a result, our median family income of slightly more than $63,000 is three times the poverty line for a family of three. But that median family income also is just a tad higher than it was 40 years ago, a telling sign of the stagnation that has settled over the region as its manufacturing base crumbles and lower- paying jobs spread throughout the local economy.

Consider GM’s announcement two weeks ago that it would invest $425 million in the Town of Tonawanda plant to build a new, fuel-efficient engine there. Happy news, to be sure, with the new line expected to support 470 jobs.

But most of those positions likely will be filled by the roughly 300 engine plant workers who currently are on indefinite layoff. Any new hires will be subject to a new wage scale that will pay them about half as much as their predecessors make.

“Lower wages mean people don’t have as much money to spend,” Foster said. “It means they’re not going to the movies or having dinners out. That affects other people. It’s the tailspin of a low-wage economy.”

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