California bosses are battling surging labor costs by giving their workers modestly shorter workweeks.
My trusty spreadsheet reviewed state figures on pay patterns dating to 2011 and found the typical California private-sector employee was paid for 33.8 hours weekly in the past year, the shortest workweek in these 14 years.
The drop was modest, off 2% from pre-pandemic 2019, but broad-based. Hours dipped in nine California industries, comparing the 12 months ending in November to 2019.
Remember, these were five wild years, filled with an economy-twisting pandemic, the worst bout of inflation in four decades, and two changes of power in the White House.
Amid that chaos, California’s average hourly wages rose 22% to a record $39. So, California’s average paycheck was a record $1,327 weekly as of November 2024 after growing 19%.
No California quirk
This is not some unique burden the Golden State heaps on the economy.
Last year, America’s private-sector worker averaged 34.3 hours a week on the job, also the smallest span in 14 years. The latest workweek was 0.5% shorter than 2019.
Americans were paid a record $35 hourly, up 25% in five years. Thus, the average weekly paycheck was $1,196, up 24%.
Who cut hours?
In California, the debate is often hot when it comes to how employers manage lofty minimum wages.
Perhaps the most intense arguments surround the fast food industry, where owners of certain chain restaurants must pay at least $20 an hour compared with the state’s $16.50 wage floor.
The leisure/hospitality job niche, which includes fast food, saw workers average 25.4 hours a week in the past year – the shortest of the past 14 years and down 3% vs. 2019.
But hours also fell 3% in three other niches – trade-transport-utility workers got 33.7 hours (also a 14-year low), personal services was at 30.7 hours, and financial firms gave out 36.5 hours.
And curtailed hours in five other categories vs. 2019 …
Education-health: 33.2 hours, off 2%.
Construction: 36.5 hours, off 1%.
Business services: 36.3 hours, off 1%.
Information: 36.7 hours (a 14-year low) – off 1%.
Manufacturing: 39.5 hours, off 0.1%.
Fat raises
The coronavirus pandemic created a tight labor market in which bosses had to pay up to attract and retain staff.
The state’s lowest-paid workers were big winners: Leisure/hospitality jobs earned a record $26 hourly average wage in the past year – a 35% jump from 2019.
Physical work also fared well. Trade-transport-utility wages jumped 29% to $32 an hour. Manufacturing rose 25% to $41, and construction increased 23% to $46.
Pay for California’s lower-wage service workers rose slightly faster than better-paying job niches.
Personal services wages were up 23% to $34 an hour, while education-health pay rose 21% to $38. Both were all-time highs, as was pay in business services, up 14% to a record $47 an hour.
Information wages rose 20% to $60 an hour, and financial pay was up 19% to $46.
Bigger paychecks
California’s most significant paycheck gain was in leisure and hospitality. Since 2019, weekly earnings rose 31% to $666.
Hands-on workers did well. Paychecks jumped 25% for trade-transport-utility workers to $1,079 a week, manufacturing rose 24% to $1,627, and construction increased 21% to $1,665.
Wage growth was smaller among California service industries.
Personal services’ weekly pay grew 19% to $1,044, education-health was up 19% to $1,260, information rose 19% to $2,217, financial increased 16% to $1,680, and business services bumped up 13% to $1,699.
Coronavirus curve
Swings in workweeks can provide clues to consumer demand.
Reopening the economy after pandemic lockdowns forced many bosses to scramble to adequately staff their businesses. Extra hours helped serve the revived spending.
Ponder November 2024’s hours compared with the pandemic era’s high. Statewide, workweeks are now 6% shorter. Nationally, where business interruptions were milder, they’re off just 3%.
California’s largest dip was in the information industry’s hours, which are down 10% from a peak when technology firms rushed to meet new online needs. Leisure/hospitality fell 9% off a top when a coronavirus-weary population wanted to have fun.
Construction hours fell 7%, slowed by the end of the pandemic era’s cheap mortgages. Trade-transport-utilities was also off 7% as online shopping’s explosive growth is cooling.
Bottom line
Remember, generous paychecks are part of the inflationary picture.
Labor expenses surged along with prices of business supplies and operations. Ballooning business costs – including wages – were usually passed along to the consumer.
California consumer prices grew by 21% in the past five years, according to the state Department of Finance. And nationwide, inflation ran 23%, the Consumer Price Index shows.
So the buying power of bigger paychecks was often zapped by inflation.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com