The lower-wage tradeoff
Quality of life keeps these Chicoans happy but with thinner wallets
You’ve heard it anecdotally from friends, backed up by government statistics and wage-watchers in the economic development field: You could probably make more dough if you checked out of Chico and set up shop in the big city.
And yet, we stay, our pocketbooks lighter but our hearts full of thanks to the small-town comfort, beautiful park and overall quality of life.
But the gap is closing—and fast. The long-accepted concept of a “tradeoff” between higher wages and quality of life has been thrown into disarray by a rising cost of living that hasn’t spared relatively rural Butte County.
“We’ve always been low in terms of California,” said Marc Nemenic, executive director of the Tri-County Economic Development Corporation. What’s different now is salaries haven’t kept pace with the increasing cost of living here.
To put it simply, you’re making less but having to spend more.
“Typical wages do vary to some degree with geographic conditions and cost of living,” said Jean Ross, executive director of the nonprofit California Budget Project in Sacramento. In Butte County, people get paid less “largely because the cost of living isn’t what it is in Sacramento or certainly San Francisco.” Plus, there’s more businesses competing for workers in more populous areas, which tends to drive up wages.
In the Chico-Paradise Metropolitan Area, the median hourly salary was $13.04, or $27,123 a year in June 2005, reports the U.S. Department of Labor’s Bureau of Labor Statistics. Things look a little better when the mean (average) wage for the Chico area is considered: $16.72 an hour, or $34,782 a year. That compares to an average hourly wage statewide of $20.26 an hour, or $42,149 a year.
But in Sacramento, the average annual wage is $41,011 a year. In L.A. it’s $41,506, in San Francisco it’s $52,355, and in San Jose a whopping $56,680. Fresno, at $34,687, and Redding, at $34,422, are similar to Chico wage-wise. The city of Merced offers workers less: an average wage of $31,997 a year.
Lara Foltz took a big pay cut to come to Chico five years ago when she landed a job as a registered nurse at Enloe Medical Center. At $19.76 an hour, the job paid less than the $26.36 an hour she was making at Highland Hospital in Oakland. But for the single mother of two, it was an easy choice. “I was making good money but couldn’t afford to buy a house,” Foltz said. Since she bought right before Chico house prices shot up, she was able to purchase a fixer-upper. “I’m doing OK, but I’m only doing OK because I bought such an inexpensive house. If I had bought a year later, I wouldn’t have been able to buy a home in Chico.”
Now, Foltz makes $31.26 an hour and works three 12-hour shifts a week as a break relief nurse. Nurses also pull overtime pay and bonuses for extra shifts worked. Her former co-workers back in Oakland are bringing in nearly $40 an hour, and while Foltz has toyed with the idea of moving to a higher-paying market, she said, “I realize that I’m in a much better position than most people in this town.
“There’s a lot of jobs that require a bachelor’s degree that [don’t pay well]. I said, ‘What can I do with a four-year degree that I’m going to be able to support my children?’ and nursing was the thing to do. I felt I could move anywhere in the country and be employed. It was a financially conscious decision for me.”
Brandy Daniel, who tracks labor statistics for the Butte County office of the state Employment Development Department (EDD), said moving to a big city doesn’t guarantee a worker more money, and certainly not a higher standard of living.
“It depends entirely on the occupation,” she said. “While wages in Northern California historically have been less, that is not necessarily always the case.”
In the Chico area, RNs average $28.42 an hour, or $59,092 a year, according to the EDD. Dentists do better ($185,263) and nursing aides do worse ($21,824). In Sacramento, the average RN brings in $65,902 a year, dentists make $177,098 (less than in Chico) and nursing aides are more successful at $26,437 a year.
Management occupations in the Chico area average a $34.27-an-hour salary, or $71,271 a year. CEO’s bring that average up, making a mean $146,205 a year. Interestingly, Sacramento CEOs pull down less at $130,819 annually. One CEO for which the salary is public information is Enloe chief Phil Wolfe, who in the 2003-04 fiscal year made $541,386 in regular compensation plus $82,160 worth of benefits.
The EDD and Bureau of Labor Statistics detail dozens of job categories, from preschool teachers ($22,044) to graphic designers ($30,888) to loan officers ($50,944) to lawyers ($92,105). Firefighters can expect to earn $33,117 a year while police and sheriff’s officers take in an average of $49,766. Full-time fast food cooks make a predictably low wage of $16,184 a year, while bartenders and waiters do slightly better at $18,297 and $19,226, respectively. The area’s 480 farm laborers earn an average of $17,591 a year, and blue-collar workers do much better, with carpenters averaging $36,978 a year, electricians bringing in $49,571 and mechanics grossing $47,817.
When employers set up shop in Chico, they usually don’t pick wage figures out of the air. Many do a salary survey, or at least pull the EDD numbers or contact an economic development agency for regional pay data.
“We get quite a few calls from employers who want to know what is the wage for this particular job category,” said Dan Ripke, who leads the Center for Economic Development at Chico State University.
“Any position where there’s a high degree of training required obviously pays more,” Ripke said, while service jobs are a dime a dozen.
Enloe Medical Center, in the midst of union disputes, decided to perform its own salary research in an attempt to prove that it was paying more than the going rate. The hospital also noted that, since 1990, wages in several position categories have gone up more than 50 percent, outpacing inflation.
Nemenic disagrees with the cynical notion that businesses pay their employers as little as they can get away with. “There’s a large population of employees who understand that having a stable, happy and productive workforce is in their long-term best interest,” he said. “Retention is important, more so than ever.”
Besides the issue of starting salaries is that of raises. While public employees often get raises based on rising costs of living, or simply longevity, that isn’t always the case in the private sector.
“It varies,” said Ross, of the CBP. “Certainly higher-wage workers have seen their wages rise faster than inflation. For lower-wage workers that hasn’t been the case.”
Between 2002 and 2003, the hourly wage of most workers in California increased 2.9 percent, while nationally wages rose only 1.1 percent, the CBP reported using government data. But when inflation is taken into account, Californians’ earning power actually declined 2.9 percent between 1979 and 2003.
“We’re in a trend of moderate unemployment and we are increasingly in a global marketplace,” she said, as companies farm out jobs to India and other countries. “Different employers have different philosophies and different business models.”
Some companies, such as Costco and Starbucks, are bucking the trend and paying higher salaries and offering fairly good health and retirement benefits. In sharp contrast are companies like Wal-Mart, which pay very low wages and offer benefits to so few employees that a large percentage of them are on public assistance.
Unionized companies, Ross pointed out, usually pay their workers more. And for certain trades working with government contracts or grants, laborers earn “prevailing wage"—a set amount determined by a region of the state. For instance, a carpenter’s prevailing wage in Sacramento County is the same in Butte County, but less than San Francisco County.
Courtney Villa, a senior at Chico State, has been working at Safeway as a courtesy clerk for almost a year. She enjoys her job where she makes $8.39 per hour, she said. Although Safeway offers good benefits, such as dental coverage, health insurance and retirement, Villa, 20, doesn’t use them because she’s covered on her parents’ insurance plan. But Safeway’s employees are unionized, so they get paid time-and-a-third on Sundays, which really helps out, Villa said. She is also working part-time as a teller at Wells Fargo to pay for her car.
Daniel, of the EDD, said that when wages go up statewide, Chico pay goes up with them. And it’s getting better. “Generally speaking, we’ve come up in our wages over the last few years.”
But workers’ rising pay isn’t keeping up with skyrocketing house prices. “That’s part of the disparity that people are talking about on the state level,” Daniel said. “It’s becoming harder and harder for people [to buy a home].”
Nemenic said he’s seeing an “equity tsunami” in which house prices are rising “far beyond what the local wages can ever hope to catch up with.”
He said “there’s been a lot of debate” among economists about what constitutes a middle-class lifestyle. A common formula is based on the presumption that one’s goal should be to own a home, and that the mortgage should not exceed one-third of the person or family’s gross income.
For example, if you’re carrying a $240,000 mortgage at 6 percent interest, your household would need to bring in $52,000 a year, or $25 an hour. That could be two people earning $12.50 each, one making $25 or some other mix.
“In this town you’d probably have to be at $50,000 give-or-take to be able to afford an average-priced home in this community,” said Nemenic, who earns $72,000 a year but still couldn’t have afforded his current home if his family hadn’t bought when prices were much lower.
Drawing a salary of $40,000 a year from his incorporated studios, artist Dayton Claudio feels he lives a “comfortable” life in Chico.
He and his wife, an elementary school teacher, have been able to send their two children to U.C.'s Berkeley and Davis, and in 2001 built a custom home. They travel, and own four cars, including a 2004 Chevy Suburban.
“The cost of living is cheaper up here so the money goes further,” Claudio said, simply.
But lower-wage earners have more trouble getting by in Chico.
“A lot more people are working two part-time jobs instead of one full-time job to make ends meet,” Ripke said.
Alan Palmer, a student taking a break from Chico State, is store manager of the Main Street Subway restaurant and makes $11,880 a year (that’s $8.25 an hour, 30 hours—on the clock—a week). His duties include running the store, stocking, ordering and he is also a “sandwich artist.”
Palmer, 22, has worked at Subway for about 10 months and until recently also managed the Baskin-Robbins on Mangrove Avenue. While he admits reaping the benefits of two jobs was nice, it took its toll on his energy. “I worked so much, I didn’t have time to go spend money,” he said. Aside from wages, Palmer receives no benefits, except a free daily sandwich. He shares an apartment with three other people and walks or relies on friends with cars to get around town. For the time being, Palmer is content with his working situation and is not too worried about future career plans. He said, “It’s something that will come to me when the time is right.”
While low-paying service jobs may seem to be the domain of college and high school students, that’s not truly the case.
The California Budget Project recently produced a report called “The state of working California 2004: Little progress for California’s workers and their families.” The study used government survey data to determine that 60.6 percent of California workers who earned between $6.75 and $7.74 an hour in 2003 were over age 25, and 60.7 percent worked full-time at these low wages.
CBP uses factors like market rents, child care costs, health insurance costs and USDA-recommended food spending to determine how much it takes to get by in a certain area and then attaches an appropriate hourly wage. (Butte County wasn’t detailed in the study.)
“We’ve seen a trend toward declining health care benefits,” Ross noted. “The less you get paid, the less likely you are to have good health care benefits. Ironically, the people who can least afford to purchase health care coverage are those who have to go out and buy it privately.”
The CBP, which doesn’t include lobbying among its tasks, recommends that minimum wage keep pace with inflation, that California offer taxpayers an earned-income credit like the federal government does, and that California, with its poverty rate higher than the national average at 13.1 percent, raise its poverty line from the federal guideline of $18,500 for a family of four.
Chico workers earn more than their counterparts anywhere else in the Butte, Glenn or Tehama counties, said Nemenic. Even so, Butte is in the lower third of California’s 58 counties when it comes to wages.
“The one trend we’re seeing is companies are paying fairly good wages, but just aren’t hiring new people,” Nemenic said. “They squeeze as much as they can out of existing employees.”
Organizations like the Tri-County EDC, a private nonprofit, try to seek out companies to locate in this area, particularly “base companies” that bring new money into the community by manufacturing something or doing creative technological work. These jobs usually pay more, Nemenic said. “Part of the reason wages are so low is that manufacturing, as a percentage of the job market, is fairly low.”
The types of jobs no one has to encourage are in the service industry. Low-paying retail and food service jobs pop up and re-circulate dollars within a community, but don’t bring any more in. “It’s all driven by population,” Nemenic said.
Ripke said it’s possible that college students are driving down what such businesses have to pay. “The employers get a pretty good deal,” he said.
So, how much is enough?
Again, it’s all relative. Until they reach an age where they’re worried about retirement, many people tend to spend as much as they make.
"'A lot’ is probably 20 to 30 percent more than what [the person is] making right now,” Ripke said half-jokingly.
“As their income increases, so do their desires,” Ripke said. He knows people who live in urban areas and talk about their next vacation to Hawaii or Europe. His Chico friends get away to Lake Alamanor, Mt. Shasta or, like Ripke himself, Yosemite Park.
If your household grosses $100,000 a year, you’re in the top 10 percent of wage-earners nationwide. “When you get up to that level, you’re almost in the stratosphere as far as regular people,” Nemenic said.
The way people think about employment is changing, too. No longer do many stick with one job for their entire career. The stability that used to come with a government job is also a thing of the past, said Ripke, who is employed under the University Foundation. “I don’t think anything in government is sacred anymore.”
Jason Willmon, 32, lives in Chico but commutes to Lindhurst High School in Marysville for his English teacher job.
There, he makes $36,000 a year. (The state has set a minimum teachers’ salary of $34,000.) A few hundred dollars are taken out of his paycheck for health benefits and retirement, and after he pays the $500-a-month rent on a small, one-bedroom house, the payment on his 2004 Nissan and student loans, Willmon said, “I have little disposable income.
“After medical insurance, retirement and taxes, my take-home pay is $2,100 a month,” he said. “I try to use it the best I can. I like to travel to places within driving distance of Chico. Luckily, my interests lie in things that do not require a constant flow of money. I play music. I draw and read. These sorts of activities, after an initial investment, can be performed without end.
“As a single man I could be pretty comfortable with my income,” Willmon said. “However, by some people’s standards I live a rather bohemian lifestyle. I certainly have no hope of ever buying a house.”
In the Chico area, elementary school teachers earn an average $52,854 a year, according to the EDD. High school teachers take in a mean $55,568. School administrators average $82,370 a year, and in the Chico Unified School District the superintendent makes $131,187.
Everyone’s heard the story about the waiter with a master’s degree, or people who leave Chico in search of greener pastures only to return a few months later.
Ripke said Chico, like other attractive college towns, experiences a phenomenon of “underemployment.” People take jobs they’re overqualified for just so they can stay here.
Also, he said, “it tends to be the fairly affluent who are more mobile.”
John Merz, who directs the Sacramento River Preservation Trust, has a salary that’s dependent on how large the nonprofit’s annual budget happens to be. Recently, he said, “I had to take a pay cut,” to $24,000.
For a couple of years, Merz earned $30,000 a year, and he’s still able to garner as much as an additional $2,000 through consulting work. He and his wife have been able to raise three children only because, Merz said, “My wife has a very good job, including benefits.” Still, they rent rather than own a home and were excited a while back to switch their mid-'80s Chevy Nova for a 1996 Toyota Camry.
He assumes he could make more money at a different job, and even considered moving to Ukiah when he was offered a job there. “I really like what I’m doing,” Merz said. “Things have worked out really well. Chico’s just a great place to live.
“I think a lot of people in Chico have made the tradeoff.”
Brandi Bouldin, 28, is a sales associate at the Artifax clothing boutique on Main Street. She makes $8,160 a year (that’s $8.50 an hour, 20 hours a week) after three-and-a-half years on the job. Bouldin also works for K-9 Crossroads where she trains dogs for people with disabilities, though her hours and wages fluctuate. Neither job provides her with benefits (except for a 10- to 15-percent discount at Artifax) but she earns enough money to pay for private health insurance, as well as to pay off her 1998 Jeep Laredo.
She shares a Chico duplex with a roommate. Bouldin graduated from UC Berkeley in 2000, majoring in child development and psychology, and she’s ready to trade her Chico jobs for better opportunities elsewhere. She’s leaving for Napa in December to take a job as assistant manager in a home working with mentally and physically disabled young adults. This new job will pay $55 an hour, and provide full benefits, as well as a free massage every month. “I’m an adult now so I need to have a real job,” she says.
Nemenic, of Tri-County EDC, is satisfied with his pay and lifestyle. “I could probably make 30 percent more if I moved but I don’t want to move,” he said. “Because of the lifestyle choice, I’m not mobile, and if you’re not mobile you kind of take what’s given to you. In L.A., there are a lot of economic development jobs and they pay six figures. But I don’t want to live there.”
—Jason Cassidy, Hilda Iorga and Lauren Brooks contributed to this story.