According to a recent report from Garner Economics, an Atlanta-based research and strategic planning company, wages in the Anniston-Oxford area declined 13.3 percent during 2011 and 2012, averaging out to about $15.38 an hour.
The report, which uses figures from the U.S. Bureau of Labor Statistics, also shows the Anniston-Oxford area was one of only seven metro areas in the country where wages fell consecutively for the last 24 months — a trend that corresponds with losses in well-paying manufacturing jobs, high unemployment and consumer confidence, experts say.
Lower wages results in less spending, hurting manufacturers in the process, they add.
The report indicates that nationally, wages increased slightly in the last two years on average. However, there was a wide disparity among metro wage trends — with only 47 out of 372 U.S. metro areas showing year-over-year wage growth.
Decreasing wages means less money for workers to spend on goods, which in turn results in less manufacturing production and work, said Ahmad Ijaz, director of economic forecasting at the Center for Business and Economic Research at the University of Alabama.
“Consumer spending overall is still pretty sluggish and one of the reasons for that is lack of wage growth,” Ijaz said. “If you’re not paid enough you’re not going to buy.”
When people spend less on products, the manufacturers who make them lose money and in turn have to cut hours or lay off employees, which lowers wages, he said.
Robert Robicheaux, chairman of the department of marketing, industrial distribution and economics at the University of Alabama at Birmingham, said changes in wages are greatly affected by local factors.
“When community consumption falls, companies that are selling and reselling wholesale products, they cut back on workforce … they cut back on the number of hours people work,” Robicheaux said. “That mostly affects wages.”
Robicheaux added that the closing of a local major employer also greatly affects wages in an area.
The Anniston-Oxford area has been bleeding manufacturing jobs for years, partially due to the recession that hit in 2008, but also because of the drawdowns of the Iraq and Afghanistan wars. The area has several facilities tied to the defense industry, including the Anniston Army Depot.
The Bureau of Labor Statistics indicates that the Anniston-Oxford area had more than 9,000 workers in manufacturing in 2002. By the end of 2012, those manufacturing jobs had dwindled to around 5,800 for the area. This is all while the area labor force grew to 53,496 people in 2012 from 51,308 in 2002.
Ijaz said while the loss of high-paying manufacturing jobs can push down wage levels, so too can high unemployment.
“When unemployment is high, you generally don’t see any wage increases … there is a lack of competition for workers,” Ijaz said.
The Anniston-Oxford area has had relatively high unemployment since the recession hit in 2008, including a 9.2 unemployment rate in 2011 and a 7.9 percent unemployment rate in 2012 on average.
Keivan Deravi, economist with Auburn University Montgomery, said the loss of manufacturing jobs lowers wages, but so can the lack of employer diversification in a community.
“Diversification shows the health of the industry and local economy,” Deravi said. “It means if one local industry closes, workers can find jobs elsewhere.”
While the area has multiple manufacturers, other than those associated with the more stable auto industry, many are linked with the military.
According to the Alabama Department of Economic and Community Affairs WARN List, which publishes notices of significant layoffs and closings around the state, more than 1,400 jobs were lost in the Anniston area in 2011 and 2012, most of which were in the defense industry. Those included the 2011 loss of 840 jobs from Westinghouse Anniston, the company responsible for shutting down the chemical weapons incinerator. BAE Systems laid off 155 workers in 2011 while General Dynamics Land Systems laid off 252 employees in 2012.
Also in 2012, the Garcy Corporation in nearby Piedmont, which manufactured store fixtures for retailers, closed and laid off all of its 117 employees.
Tony Pugh, president of FabArc Steel Supply in Oxford, said his company struggled in the first few years after the recession, forcing it to cut jobs and at one point operate at only 50 percent capacity. FabArc specializes in structural steel fabrication and provides steel packages to auto manufacturers, medical office building manufacturers and others. In the last year, the company has rebounded somewhat, renovating part of its facility and adding about 60 jobs in the process.
“That has got us back up to full capacity,” Pugh said.
Pugh said he expected business this year to be about as good as last year.
Kronospan in Eastaboga, though it suffered with decreased work in the last few years, was a local company that did not take a hit in employment, said John Connell, director of human resources for the company. The company mainly manufactures laminate flooring for homes.
“We have never cut any pay or benefits or work hours,” Connell said. “And we’re proud of that.”
Like Pugh, Connell does not expect much business improvement this year.
“We think things will be about the same,” Connell said. “We always hope it’s better, but we’re not sure right now.”
Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.