The WSJ Spotlights Working Class Woes

The Wall Street Journal puts the woes of the working class front and center (on page one) today, using the devastating crash in Las Vegas to tell the story.

In illustrating how one of the few bright spots for laborers in the last decade turned out to be a mirage, the Journal shows just how bad the situation has been for the working class.

That’s signaled up high in a superb nut graph:

During the boom years, Las Vegas wasn’t just a place where gamblers could hit the jackpot, but where hard-working hotel maids and cocktail waitresses could, too. The city offered something almost no other place in America did: upward mobility for the working class.

Now, that is evaporating.

And in the excellent lede:

Drew Johnson and his wife, Tina had the life many Americans only dream of: A big house in a swanky suburb, a backyard hot tub, and a $100,000 deposit on a new condo with views of the Las Vegas Strip and 24-hour concierge service.

They did it all on the salaries of a construction-equipment salesman and a cocktail waitress who brought in $1,000 a week in tips alone. But the recession has slashed their incomes by nearly half, and financing for the condo might not come through.

Journal reporter Tamara Audi points out clearly how the fortunes of the working class rested on the largesse of the free-spending well-to-do:

While the union sent casino workers’ salaries and benefits up, tips were often what helped push ordinary workers into the world of posh condos and sports cars. Tips could triple the base pay of casino workers who dealt directly with guests. Gamblers who hit it big on the tables; young visitors who spent thousands for bottle service at night clubs; and businessmen treating clients to lavish dinners, were all free and easy with gratuities, say current and former casino workers. Valet attendants could take home an average of $500 a week in tips, while room-service waiters at swankier properties could earn $600 a week in tips, often outstripping their weekly base salaries.

Those people bought houses and condos and created more good-paying working-class jobs in construction that have now vanished.

Audi puts this all in historical context with this terrific graph:

Much in the way jobs on Detroit’s assembly lines allowed poor Southern blacks a route out of poverty two generations ago, Las Vegas provided a shot at the middle class for workers fleeing dying industrial centers, or for immigrants arriving from Latin America and Asia.

And finds an outstanding example in a family that uprooted from the South to head West. It’s worth quoting at length:

During good times, the pull of Las Vegas was so strong that it sometimes drew entire communities. The Bias family — about 150 aunts, uncles, cousins, brothers and sisters — moved to Las Vegas from Tallulah, La., over three decades as economic conditions in the mill town deteriorated. More than 43% of Tallulah’s 9,000 residents live below the poverty line, according to the latest census.

In Las Vegas, the Bias family found steady, well-paying jobs. The men went to work as cooks in the casinos and the women worked in housekeeping. Sometimes, it seemed that all of Tallulah had relocated to Las Vegas, says Josh Bias, 31. “It got to the point where I’d meet someone here from Louisiana and I’d say, ‘Don’t tell me, you’re from Tallulah,’ ” Mr. Bias says.

Mr. Bias, the eldest of 10 siblings, was able to go to college. To help pay for school, he found work as a cook, alongside his father and uncles. He took to the profession, and landed a job as a fry cook at a casino. He says he made $17.35 an hour, received full medical benefits, a 401(k) plan, and free training through a union and casino-backed program to upgrade his skills.

His wife was able to stay home and raise their two young children. There was a Chevy Malibu, a spacious apartment, and new clothes and toys. His eight-year-old daughter talked about “going into the family business” and becoming a pastry chef.

But in 2008, business on the Las Vegas Strip was stalling. In early December, Mr. Bias was laid off from his job. His family moved into a cheaper apartment in a sketchier part of town. He negotiated with his car lender to put off payments for a few months.

Mr. Bias recently landed a new job at the M Resort, where he works from 10 p.m. to 6 a.m. as a cook. Even though it’s a non-union job and pays less, he’s grateful he got it. “I was told I beat 10,000 other people who applied for this position,” he says.

Mr. Bias said the family is helping each other, with working relatives taking in laid-off ones.

To the extent that the Second Gilded Age trickled down to workers, well, it’s dried up now.

If I have a beef with this story it’s in the way it uses some statistics. For instance, I think it should have measured how far home prices have fallen from their peak instead of “between last year and this year”?

And after the median price of existing homes rose by 122% in sales between 2000 and 2006 — more than double the national rise of 49% — sale prices fell by 30% between last year and this year.

And this is problematic:

While average wages stagnated throughout much of the country over the past decade, pay in Nevada skyrocketed. Wages in the state grew at nearly double the national rate between 2000 and 2008, according to an analysis by the Economic Policy Institute, a Washington think tank.
Union workers — who account for the bulk of employment along the Las Vegas Strip — saw their pay grow by 12.6% between 2000 and 2008, while union workers nationwide saw an increase of 2.9%, according to the Economic Policy Institute. Nevada’s non-union pay increased by 5.4% in the same period, while wages for all workers in the U.S. increased by 1.6%.

First of all, according to these numbers anyway, Nevada’s wages grew at least triple the national rate, not “nearly double.” Also, I really wish stories would tell you whether they’re using real wages or non-inflation-adjusted ones. I’d guess that these are real wages, but the WSJ should have told us.

But those are relatively minor technical issues. The key thing here is the broader story, and by that measure, the Journal has an excellent one.

There’s even (gasp!) a positive nod to unions!

The union made upward mobility part of the Vegas allure. In Vegas, the union-negotiated salary for a hotel maid is still $14.25 an hour. In contrast, the median wage for the same worker in Orlando is $8.84 an hour; in Phoenix, it’s $9.25, according to the Bureau of Labor Statistics.

$14.25 an hour? You can live on that. $8.84? Not so much.

It’s almost always worth applauding a paper like the Journal for taking a look at the working class, which after all, isn’t its demographic. When it pulls off a story like this, it’s worth a standing O.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.