Thursday, May 17, 2007

"Cost of Living" Pay Increases

From time to time (meaning like once a week, once a month, or once a quarter -- depending on how many Personal Service Contracts are up for negotiation), I get the question: "Hey, does the company have to give me a cost-of-living raise?"

I have a standard answer: "If you're working at scale, you get a 3% raise. If you're overscale, then no. The company doesn't have to give you a raise."

This response often meets with some surprise (like "Wha-at?") because staff employees -- particularly long-term employees -- have been used to getting the commonly-known "yearly bump-up" in their salaries.

This was pretty much the standard deal through the 1990s. Wages in general were rising. And animation employees who'd been at one studio a while were used to getting annual hikes in their paychecks, like from 4% to 7% a year.

But in the 21st century? Ah, not so much.

Today the corporate watch-word is "hold the line." And while there is pretty robust employment across Animation Land right now, companies have been fairly aggressive about holding down labor costs. Nobody hands out four-thousand-dollar-per-week stipends unless they absolutely have to.

The irony here is that real-world inflation is probably higher now than at anytime since the 1970s. The government "Consumer Price Index" tracks along at 2.2% per year. What's considered the "core inflation" (everything but fuel and food) is what the Feds call "subdued."

But in Reality Land, that piece of real estate where individuals have to put gas in their cars and food in their stomachs, inflation is way higher. As Barry Ritholtz at says:

One way to actually measure how absurd the US core inflation measure is to look at what has happened to the spread between headline CPI and Core CPI. If Core CPI is understating inflation, than the spread should be widening. If it is accurate, the overall ratio between the two should be relatively steady.

What does the data show? The spread has increased substantially since the US adopted an ultra low rate/easy money policy under Greenspan (now affiliated with bond giant PIMCO). Since the easy money policy of the 1990s, and the rate slashing of the 2000s, it is no coincidence that the spread between the headline number and the core has grown dramatically.

What this means to YOU is that, as studios phase out cost-of-living bumps, you -- especially if you're overscale -- fall farther behind relative to where you've been.

The other wrinkle: In the seventies, most labor unions were negotiating bigger minimum-rate increases for members because official inflation was so high. And now that the inflation rate is "lower"? Why, negotiated increases are lower.

Funny how that works.


Jeff Massie said...

I remember once talking to an animator who bragged that he was making a huge amount of overscale -- in fact, he was being paid almost $1,000 a week!

He was a bit dumbfounded, to put it mildly, when I informed him that he was actually making less than minimum journey scale, which had just gone over $1,000 per week. He had been hired five years previous, without a personal service contract, and his pay was set at a rate which at the time seemed like a fortune.

Based on what I see when I tally the wage surveys, I suspect this may happen more than we realize, especially as more and more people work long-term without personal service contracts. Yes, the studios are supposed to increase you wages automatically, but if you don't raise the subject you can slip through the cracks if they don't have you flagged as a scale-wage employee. Bottom line: unless the bump-ups in your PSC exceed 3% per year, you need to keep track of where your pay lies in relation to the minimums.

(By the way, we filed a grievance and got him his back pay. And guess what -- he wasn't blacklisted, either.)

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