Many California banking jobs have disappeared, but pay gains have outstripped the national average, the Federal Reserve Bank of San Francisco said.
From 1994 to 1997, wages and salaries for financial institution workers swelled 19% in California, versus 14% nationwide, according to a study released Friday. California bank salaries averaged about $5,000 higher than those elsewhere in the nation.
Several things could explain the higher rate of pay in the Golden State, said Robert G. Valletta, the San Francisco Fed senior economist who wrote the study.
One simple explanation is that California was recovering from a recession during the period, he said. However, Mr. Valletta also said that because banks in California tend to be technology-oriented, they require workers with stronger-than-usual technological skills. These employees demand higher wages, he said.
Banks have also been pushing workers to be more productive and rewarding them with higher pay, he said.
"Overall, the higher increase in California is probably a combination of increasing the productivity of existing employees and hiring people who come in with a higher skill set," Mr. Valletta said.
John C. Wilson, a managing director of financial services at Korn/Ferry International, agreed.
"These technology-oriented positions command a higher degree of compensation because of the scarcity factor," Mr. Wilson said.
Another reason for the higher pay here is the fact that the cost of living in the San Francisco Bay area, arguably California's financial center, is far higher than in most other places in the country.
"Whether someone is moving here from Los Angeles or Boston or New York, I try to get them ready for sticker shock," Mr. Wilson said. "I've been seeing more and more upward adjustments for the cost of living element to ease that pain."
Not surprisingly, the study found that California banking has been hit hard by job losses. The state has been on the front line of banking industry consolidation.
California depository institutions shed 26% of their employees from May 1990, when jobs peaked at 275,000, through January 1999. The job cuts were concentrated in the first half of the decade; about 22% of the posts had been eliminated by the end of 1995.
The rate of job losses is far above the national average of 10%, according to the study, which drew on Commerce Department data.
Consolidation is certainly one reason for the comparatively rapid decline in California, Mr. Valletta said. But he also hypothesized that western banks have been early in making use of new delivery technologies, thus reducing the need for workers.
"Some of the California banks have been at the forefront of introducing new technology innovations and new service techniques into their distribution networks," Mr. Valletta said.