Filler: Losing the annual pay bump adds up

If you've been moping around, feeling like you're down for no reason and fearing that one of those vague mental issues they advertise drugs for has you in its sights, cheer up. You don't need a prescription for Happyjoyapham. You have a reason to feel flatter than last week's Fresca.

I say it's the economy, then you say, "No, I've accepted that my house is now worth less than my first bicycle, and the 401(k) has been rolled over into an old Folgers can containing $4.01. There's something else draining the zippity from my doo dah."

But it is the economy, and a comfortable future is disappearing before your eyes. While the top of your brain, which mostly concentrates on what to have for dinner, doesn't understand the ramifications, the shadowy bottom of your brain does, and it's making you feel duller than a "Thirtysomething" marathon.

The death of the annual pay raise is to blame.

Remember that little bump that came not because you got a new job title or blackmailed your boss with pictures from the waning hours of the office Christmas party, but just because another year had passed? For most of us, the automatic pay raise is now a quaint remnant of the recent past, like Nordic Tracks and floppy disks.

From 2003 to 2007, the National Average Wage Index increased just under 5 percent annually -- a healthy trend not far off the average for the past 50 years. From 2007 to 2010, it increased about 1 percent annually. And most of the recent increase came for the few folks who bettered their career, not those just sitting at the same desk as last year.

Told that, we think, "OK, but missing my yearly hike isn't nearly as bad for the wallet as the fact that my stock portfolio and home value plummeted faster than Macauley Culkin's post-'Home Alone' career."

Wrong.

Say you and your spouse are both 40, both work, and plan to until age 65, and between you gross $100,000 per year. Say you used to get 4 percent annual raises, but this year got none. How much did that cost you?

The instinctive answer is $4,000. The accurate answer is about $150,000, pre-tax.

You're planning to work another 25 years, and this year's $4,000 is never going to be a part of your salary. Even if raises come next year, they won't make up for the 4 percent you didn't receive this time around. So 25 times $4,000 is $100,000 -- but that's not all.

Whatever hikes you get in the future will be built on a base that's 4 percent smaller. If you have a matched 401(k), the boss put 4 percent less in. And you increased your eventual Social Security benefit less. Change jobs, and you likely still won't make up the loss, because new salaries are closely related to old ones.

If our theoretical couple just endured their third year without a raise, they're down about $450,000. And the cost of their health care rose, driving their net paycheck down, while the price of everything, from gas to train fare to little Ophelia's French horn lessons, went up.

Unemployment is bad, but most of us have jobs. The housing market is bad, but most of us aren't selling.

The end of the annual raise, however, affects a lot more people, and it's devastating. It's a result of the surplus of workers that high unemployment provides, although with so many companies making record profits, it does make one wistful for a time when corporations saw employees as more than widgets, to be purchased at the lowest possible price.

Let's hope the yearly pay hike returns. If it doesn't, the Nordic Track and the floppy disks won't be quaint memories anymore. They'll be how we exercise and store data, once gym memberships and computers from this century are beyond our means.

Lane Filler is a member of the Newsday editorial board.