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Survey Notes San Diegans Spending More, Earning Less

Survey Notes San Diegans Spending More, Earning Less

Pay Scales Not Keeping Pace With Cost to Live Here

BY RENE’E BEASLEY JONES

The Boston and San Diego regions ran neck-and-neck when comparing the overall cost of living during the third quarter of 2003, a national survey shows.

San Diego came in 38 percent above the national average, compared to 35 percent for Boston, according to the ACCRA Cost of Living Index, compiled by chambers of commerce and economic development councils nationwide.

When the housing component including owning and renting was separated from the cost-of-living equation, San Diego’s regional costs surpassed Boston’s by more than 25 percentage points, the survey shows.

But San Diego County’s average weekly wage came up short. People living in Suffolk County, which includes Boston, pulled in an average of $282 more per week than San Diego-area workers during the second quarter of 2003, according to U.S. Department of Labor.

The federal index shows the average weekly wage here stood at $757. Folks in the Boston area earned $1,039.

Employers here are concerned about retaining and recruiting quality workers in this high-cost environment, said Larry Fitch, president and CEO of the San Diego Workforce Partnership.

“They’re worried that people can’t afford to live here,” Fitch said. “They’re trying to figure out how to deal with it.”

Weekly pay in the New York City region , the most costly place in the nation , came in at $1,250. San Mateo, Calif., workers averaged $1,127.

Phoenix, which vies with San Diego for jobs, enjoyed a cost of living index 3 percent below the national average. Housing fell well below that number. But average weekly pay there was $710, not much lower than San Diego’s.

Even Madison County, Ala., which has a much lower cost of living ranking than San Diego, showed average incomes slightly more than than the local region.

Two factors keep wages from rising to meet the cost of living here, local officials said. First, they blamed the “psychic benefit” of living in the nation’s best climate where surfers, bikers, and runners enjoy their sports all year.

Also, San Diego is a border region that draws international immigrants who are willing to work for less.

Last year, the value of homes in San Diego County increased by more than 22 percent. In comparison, the county’s average weekly wage grew 1.9 percent when comparing the second quarter of 2002 to 2003, federal reports show.

Shoshana Grossbard-Shechtman, an economics professor at San Diego State University, doesn’t expect a mass exodus of labor because local pay scales aren’t climbing in tandem with costs, especially housing.

“This can go on for a very long time,” Grossbard-Shechtman said. “People will just live in smaller quarters and apartments, and they won’t necessarily own a home.”

Low-skilled and younger workers , those most affected by the chasm , will have to accept their fate. They’ll share apartments or work a couple of jobs to make the rent, she said.

Workers in Madison County, Ala., which includes Huntsville, earn a weekly average of $766, or $9 more than San Diegans, according to federal statistics.

“The (Madison County) median family income is one of the highest in the Southeast,” said Ken Smith, director of research for the Chamber of Commerce of Huntsville/Madison County.

Huntsville, with a metro population of 350,000, relies heavily on the defense and aerospace industries. A large percentage of those jobs are in the higher-paying engineering and technology sectors, Smith said.

Manufacturing makes up only 25 percent of the city’s economic base.

Huntsville is home to NASA’s Marshall Space Flight Center. The U.S. Army goes there for a lot of its missile and helicopter work. Again, more of that employment is in program management rather than manufacturing.

As of December, the median price for resale homes in San Diego County rose to $412,000, according to a San Diego Association of Realtors report. New homes generally run about $100,000 more.

By comparison, the median price for resale homes in Huntsville was $108,900, Smith said. The median price for a new home there ran $172,000.

Gasoline cost an average of $1.82 a gallon here on Feb. 3. In Huntsville, motorists paid $1.60.

The San Diego area ranked highest in the ACCRA Cost of Living Index for transportation costs. Those living in the Los Angeles area pay the most for utilities.Residents in the Oakland region spend more than anyone else in the ranking on groceries.

Kelly Cunningham, research director for the San Diego Regional Chamber of Commerce, said the lower pay-higher cost phenomenon may spell trouble for local employers, even those in technology fields and manufacturing that typically pay more.

Skilled workers can go anywhere in the nation, Cunningham said. So the ratio of pay to the cost of living makes it tough for San Diego companies to compete for the best and brightest.

Dolores Davies, a UC San Diego spokeswoman, said lower salary levels and the higher cost of living in San Diego create serious challenges for the university, which draws from a worldwide pool of talent.

” We have to manage strategically in our faculty recruitment efforts,” Davies said.

However, the caliber of faculty and students at UCSD, along with other factors such as the quality of life and climate, help counteract the negative impact of wages vs. costs, she said.

Also, Cunningham has seen census reports that indicate the region’s 20- to 30-something crowd may be thinning. The area is seeing an increase in older segments of the population, or people with wealth who can afford to live here.

“That’s a concern that San Diego has to pay attention to in the next 10 years,” he said.

The Workforce Partnership’s Fitch believes the cost of living here will put upward pressure on the wage scale.

“It’s becoming more difficult to use ‘sunshine dollars’ as an inducement,” he said.

Another part of the equation is a well-trained work force. Employees should raise their skill levels to take the kinds of jobs that pay better and are currently going to skilled people outside the region, who move here and drive up the local housing demand even more.

It’s all relative, Fitch said. People from the Bay Area or Manhattan may think San Diego is a bargain. “But if you’re recruiting someone from Kansas, it’s going to be hard.”

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