Local Wages Continue to Lag; Local Housing Prices Continue to Rise (Scranton: middle-class, transplants)

[SteelCityRising]

Is anyone else as concerned as I am about the future economic vitality of our region for successive generations? We receive home delivery of the Wilkes-Barre Times-Leader newspaper, and while reading the main section today my jaw dropped nearly to the floor as they profiled some of our area's largest-employing trades and their corresponding salaries relative to the state averages, most of which are already below national averages to begin with. The news is not well, my friends. I have provided you with some of my personal extrapolations of the data below:

• Health Care/Social Services
  a.) Total Employed in Luzerne County : 21,196
  b.) County Average Wage: $31,978
  c.) State Average Wage : $36,979
  Deficit : -$5,001
  Percentage : -13.5%
• Manufacturing
  a.) Total Employed in Luzerne County: 18,866
  b.) County Average Wage : $39,320
  c.) State Average Wage : $47,293
  Deficit : -$7,973
  Percentage : -16.9%
• Retail
  a.) Total Employed in Luzerne County : 17,933 (Including Me!)
  b.) County Average Wage : $20,662
  c.) State Average Wage : $23,096
  Deficit : -$2,434
  Percentage : -10.5%
• Food and Lodging
  a.) Total Employed in Luzerne County : 11,451
  b.) County Average Wage : $12,211
  c.) State Average Wage : $13,431
  Deficit : -$1,220
  Percentage : -9.1%
• Local Government
  a.) Total Employed in Luzerne County : 11,148
  b.) County Average Wage : $33,417
  c.) State Average Wage : $38,343
  Deficit : -$4,926
  Percentage : -12.8%
• Office/Clerical Services
  a.) Total Employed in Luzerne County : 8,850
  b.) County Average Wage : $19,567
  c.) State Average Wage : $27,418
  Deficit : -$7,851
  Percentage : -28.6%
• Transportation/Warehousing
  a.) Total Employed in Luzerne County : 7,756
  b.) County Average Wage : $29,824
  c.) State Average Wage : $36,087
  Deficit : -$6,263
  Percentage : -17.4%
• Wholesale Trade
  a.) Total Employed in Luzerne County : 6,594
  b.) County Average Wage : $39,910
  c.) State Average Wage : $55,748
  Deficit : -$15,838
  Percentage : -28.4%
• Finance and Insurance
  a.) Total Employed in Luzerne County : 6,024
  b.) County Average Wage : $47,497
  c.) State Average Wage : $62,092
  Deficit : -$14,595
  Percentage : -23.5%
• Construction
  a.) Total Employed in Luzerne County : 5,477
  b.) County Average Wage : $36,769
  c.) State Average Wage : $45,092
  Deficit : -$8,323
  Percentage : -18.5%

This is unacceptable. I've long known that local wages, as an aggregate, had trailed the state and national averages by unthinkable margins, but up until this point I had assumed it was because we merely had a larger proportion locally of blue-collar and lesser-educated and skilled workers in the labor force than other comparably-sized metropolitan areas, hence the lag. Now I can see for myself that employers are pillaging the local workforce indiscriminately. Even if you do as I have done and invest nearly $100,000 in a college education at a highly-rated school, you'll still be earning nearly 1/4 less, on average, as your fellow graduates who relocate outside of the Scranton/Wilkes-Barre metroplex to work. Why? I could graduate from King's College with a cumulative GPA of 3.75 and earn less than a fellow graduate who relocates to Baltimore and had a GPA of 3.25? What, then, is the incentive for locals to better themselves with an education if there is no "reward" for doing so?

How long is it going to take for officials to finally construct the commuter rail from Scranton to Hoboken so that the thousands of us in the 22-35 age bracket who don't wish to be underemployed the rest of our young professional lives have the ability to power-commute without contributing to the congestion already so prevalent along I-80? Something needs to be done. For years local residents were pacified with our terrible wages under the guise of "our cost-of-living is dirt cheap." Well, look around you now. Affluent transplants from NJ and NYC are selling their high-six-figure homes and building homes here in the $300,000 range, boosting property values for everyone else. While local inventory of home listings continues to grow, so do home prices; Scranton had the nation's fourth most rapidly-appreciating housing market a year or two ago. In other words, we're all screwed when housing prices finally rise out-of-reach of those who are working locally for suppressed wages.

Smaller single-family homes that I had eyed up in Scranton that might have sold for $75,000 in 2000 are now selling for $125,000. Going by the general financial rule of thumb that an individual should not invest more than 1/3 of their annual income into housing costs, then a household would have to earn $25,000 annually to comfortably afford that $75,000 home in 2000 and over $40,000 in 2008, an increase of over $15,000 over an eight-year period, or roughly $2,000 per year. Who around here gets an annual raise of $2,000? I didn't think many of you did. Now let us assume that in 2016 that same home in Scranton will have appreciated by another $50,000 up to $175,000. That means that same household would now have to earn just under $60,000 annually to comfortably afford that home, an increase of $20,000 in just another eight years. Do you think that you'll be getting an annual raise of $2,500 for each of the successive eight years to be able to purchase that same home in 2016 that you would have been able to have afforded back in 2000, just sixteen years earlier, for a bit over 1/3 of the household income you'd need then? See the point I'm getting at?

I'm one of those who is employed in the "Retail" category above in Luzerne County, and my annual salary is not far below that $20,662 figure (more like $15,000). My annual income has grown perhaps $3,000 over the past three years, or $1,000 per year. That's only half as much as is needed to keep pace with the inflation of housing prices alone (let's not even discuss the rapid inflation of fuel, food, taxes, health care, etc.). Let's flash-forward to next year at this time when I will have hopefully landed a position as an entry-level accountant with a local firm earning $40,000 per year, which may indeed jump to $45,000 the next year when I attain my CPA certification. As a college-educated professional I will still only be able to afford a home that is valued up to $135,000---perhaps even more if my partner ever decides to motivate himself professionally and go back to school to specialize in something besides answering a telephone. While my choice of modest single-family dwellings in need of few or no repairs in nice neighborhoods in our area is high right now, what will the selection be like in that price range when I'm prepared to purchase my first home even just a year-and-a-half into the future? Dwindling, no doubt.

I read an article about a year-and-a-half ago in an independent newspaper in State College profiling the housing affordability crisis that was already becoming evident in Centre County. The influx of white-collar professionals driven by Penn State had boosted housing prices there to unattainable levels for the blue-collar support staff, forcing them to buy in far-flung areas like Lewistown or Lock Haven and make the treacherous commute daily back into State College. While that metropolitan area is only 1/5 the size of ours, it's only a matter of time before a similar issue hits home. Thankfully I chose a career path that should provide me an annual raise high enough to keep pace with inflation, but what about those who are valued and essential members of society who receive very little in the way of a cost-of-living adjustment annually, if even any at all (Scranton PD, for example, working without a raise for the past six years). Will they have to move to Tunkhannock or Waymart and commute 30-minutes each way into Scranton/Wilkes-Barre to work? This probably won't become a major issue in our area for at least a decade, but it is imperative that we bring this phenomenon to the attention of our local elected officials and Chamber of Commerce heads now so that long-term strategies to provide affordable housing to the lower-middle-class despite rising housing prices and lagging wages can be implemented.

Over the past year or so the spike in fuel prices has caused a sudden slowing of the commuter-influenced growth in the Poconos, which could be a blessing in disguise for those of us in Scranton/Wilkes-Barre. I had once projected that the rapid growth of Monroe County could eventually send thousands of new residents annually into Luzerne and Lackawanna Counties as open space began to become depleted along the I-380 Corridor. However, at that time I hadn't accounted for our nation's unexpected surge in fuel prices. The slower the growth rate into Scranton/Wilkes-Barre, the better prepared we all can be to address this "housing affordability crisis" before it's too late.

[MermanMike]

It is not good news indeed. But one thing I think you may be pleasantly surprised about is that by the time you go to buy a house in a year or two, there will likely be more houses on the market and they will be cheaper. It's anyone's guess, but I'd put my money on a continued downturn well into the next couple of years.

And maybe eventually people will start to look around and wonder why they are making less money and in more debt than ever, and start to live their lives in a way that supports their communities and enriches their souls. Imagine if we lived in a debt-free society...how free we could all be, creative, living for the joy of every day, rather than working to pay a bank for the right to live in a house.

I'd recommend buying as cheap a house and you can stomach and paying it off fast rather than going for one at the top of what seems reasonable.

[SteelCityRising]

Originally Posted by MermanMike

It is not good news indeed. But one thing I think you may be pleasantly surprised about is that by the time you go to buy a house in a year or two, there will likely be more houses on the market and they will be cheaper. It's anyone's guess, but I'd put my money on a continued downturn well into the next couple of years.

Thanks for the encouragement. If prices in the area hold relatively steady over the next two years, then my soul's incessant worrying will be assuaged. I don't ever foresee there being any one catalyst---not the commuter rail, not the medical college, not the casinos, not the Yankees---that will cause the local real estate market to "bubble" as it did in many other areas.

Originally Posted by MermanMike

And maybe eventually people will start to look around and wonder why they are making less money and in more debt than ever, and start to live their lives in a way that supports their communities and enriches their souls. Imagine if we lived in a debt-free society...how free we could all be, creative, living for the joy of every day, rather than working to pay a bank for the right to live in a house.

True. I have direct deposit and use my M&T debit card whenever I make transactions and am low on cash. I rarely use a credit card. The one I do use has only a $300 limit, and I use it extremely sparingly---just enough to pump some activity into my account in order to positively impact my credit score.

Originally Posted by MermanMike

I'd recommend buying as cheap a house and you can stomach and paying it off fast rather than going for one at the top of what seems reasonable.

That's what I plan to do. I don't need anything fancy. Ideally I'd like to pay a premium to be graced with pocket doors, natural woodwork, a turret, stained glass windows, and all of the other Victorian-era nuances I've come to love from our local historic architecture, but paying $100,000 for a vinyl-sided two-story with six rooms and much less character on a 40' x 140' city lot works well too.

[bobconan]

Ive been saying that for like a year now and you thought I was just a humbugger.

This is unacceptable. I've long known that local wages, as an aggregate, had trailed the state and national averages by unthinkable margins, but up until this point I had assumed it was because we merely had a larger proportion locally of blue-collar and lesser-educated and skilled workers in the labor force than other comparably-sized metropolitan areas, hence the lag. Now I can see for myself that employers are pillaging the local workforce indiscriminately. Even if you do as I have done and invest nearly $100,000 in a college education at a highly-rated school, you'll still be earning nearly 1/4 less, on average, as your fellow graduates who relocate outside of the Scranton/Wilkes-Barre metroplex to work. Why? I could graduate from King's College with a cumulative GPA of 3.75 and earn less than a fellow graduate who relocates to Baltimore and had a GPA of 3.25? What, then, is the incentive for locals to better themselves with an education if there is no "reward" for doing so?

We dont. I mentioned that once before it dosen't pay off and usually leaves you worse off. Only nice thing is that you hacve the ability still to be a self made man here. I think in the office I work in there are only 4, 4 year degree holders out of 21 people not including customer service.

How long is it going to take for officials to finally construct the commuter rail from Scranton to Hoboken so that the thousands of us in the 22-35 age bracket who don't wish to be underemployed the rest of our young professional lives have the ability to power-commute without contributing to the congestion already so prevalent along I-80? Something needs to be done. For years local residents were pacified with our terrible wages under the guise of "our cost-of-living is dirt cheap." Well, look around you now. Affluent transplants from NJ and NYC are selling their high-six-figure homes and building homes here in the $300,000 range, boosting property values for everyone else. While local inventory of home listings continues to grow, so do home prices; Scranton had the nation's fourth most rapidly-appreciating housing market a year or two ago. In other words, we're all screwed when housing prices finally rise out-of-reach of those who are working locally for suppressed wages.

Local government has pretty much given up, Its all in New Jerseys hands now but they probably wont bother now becasue of the casino. Look up the Lackawanna cutoff and then know that the reason it was torn up was because in the 80's there were rumors about casinos coming to the poconos(I think that when Ceasars was built)didnt want competition with Atlantic city.

There probably wont be a downturn out here as there was never a "Bubble" and wages will always be bad because there are more people then jobs.
Don't count on that accountant job either. I work with an accountant (in her 40's)that was a professor and I think she makes about that much. If your going to start your life from scratch then you do it somewhere that house values are real and then move to a place like this so you have some equity to cash out. In case you didn't figure out that what the majority of the people looking to come out here do. If they didn't then they have a profession that forces company's to hire real professionals and pay something better then 50,000/yr(engineer,doctor...).

The normal rules don't apply out here. Trust me. If you are in the kinda way that you have to realize that then the sooner the better. If you never have to come to that realization then you never will.