NELP Report: Falling Wages In Factory Jobs

Dave Johnson“My experience is that the greatest aid to efficiency of labor is a long line of [unemployed] men waiting at the gate.”

— Magnate Samuel Insull, 1920s

Economists strive for “efficiency” in our economy. “Efficiency” means that the things we buy are produced at their lowest possible cost. The wages that working people are paid are a “cost” to be eliminated. Egypt’s Pharaohs built the pyramids with “efficient” labor. Imperial Rome and the old Confederacy also had particularly efficient labor markets.

American factory jobs used to provide reasonable pay and benefits – largely because of unions and democracy. So how do you make manufacturing jobs more “efficient?” You can move the factory to a country that doesn’t allow unions. Our country used to recognize this game and “protected” the good wages and benefits that democracy provided people with tariffs that raised to price of goods made in places that allowed exploitation of working people. Solution: “free trade” that pits our democracy against thugocracies with few or no protections for people or the environment.

“Free trade” worked – to force unemployment up and wages down. We lost more than 6 million manufacturing jobs and 60,000-plus factories between 2000 (the year before China entered the World Trade Organization) and 2010.

The National Employment Law Project (NELP) has a new study out today that finds that factory jobs now pay much less than they did even a few years ago. The NELP study, “Manufacturing Low Pay: Declining Wages in the Jobs That Built America’s Middle Class,” by Catherine Ruckelshaus & Sarah Leberstein, says:

“… while the manufacturing sector has been resurging in the last few years, growing by 4.3 percent between 2010 and 2012, the jobs that are returning are not the ones that were lost: wages are lower, the jobs are increasingly temporary, and the promised benefits have yet to be realized. “

Some key findings from the report:

  • Americans perceive manufacturing jobs as “good jobs.”
    Nine out of ten Americans believe that a strong manufacturing base is very important to our country’s standard of living, according to a poll conducted by the consulting firm Deloitte for the Manufacturing Institute. When asked what type of facility they would support to bring jobs to their community, a manufacturing plant was at the top of the list.
  • Manufacturing wages now rank in the bottom half of all jobs in the United States.
    While in the past, manufacturing workers earned a wage significantly higher than the U.S. average, by 2013 the average factory worker made 7.7 percent below the median wage for all occupations.
  • The perception that manufacturing jobs are highly paid disguises how many workers are stuck at the bottom.
    Today, more than 600,000 manufacturing workers make just $9.60 per hour or less. More than 1.5 million manufacturing workers — one out of every four — make $11.91 or less.
  • Manufacturing wages are not even keeping up with inflation.
    Real wages for manufacturing workers declined by 4.4 percent from 2003 to 2013—almost three times faster than for workers as a whole.
  • In the largest segment of the manufacturing base—automotive—wages have declined even faster.
    Real wages for auto parts workers, who now account for three of every four autoworker jobs, fell by nearly 14 percent from 2003 to 2013 — three times faster than for manufacturing as a whole, and nine times faster than the decline for all occupations.
    The growth in the number of auto parts jobs is cause for concern, because the typical parts worker makes one-third less than the typical auto assembly worker, and puts downward pressure on the higher assembly wages.
  • There has been a resurgence in the number of auto industry jobs since the economic crisis peaked in 2009.
    The auto industry has added nearly 350,000 jobs and invested $38 billion in U.S. facilities since 2009, which indicates a long-term commitment to building vehicles here. As long as vehicles are assembled in the United States, the economic benefits of a just-in-time manufacturing base ensures that jobs at many parts suppliers are also likely to remain in the country, even if wages rise.
  • New jobs created in the auto sector are worse than the ones we lost.
    In five of the 10 “Auto Alley” states—Michigan, Indiana, Ohio, South Carolina, and Tennessee—new hires at auto parts plants are paid roughly one-quarter less than the other auto parts workers in the state.
    In six of the 10 Auto Alley states—Alabama, Mississippi, Indiana, Ohio, Michigan, and Illinois—auto parts workers saw real monthly earnings decline between 2001 and 2013. Alabama saw the steepest decline—24 percent—over that period.
  • Heavy reliance on temporary workers hides even bigger declines in manufacturing wages.
    About 14 percent of auto parts workers are employed by staffing agencies today. Wages for these workers are lower than for direct-hire parts workers and are not included in the official industry-specific wage data cited above.
    Estimates based on U.S. Census Bureau data, however, indicate that auto parts workers placed by staffing agencies make, on average, 29 percent less than those employed directly by auto parts manufacturers.

More “Free” Trade?

The giant companies are trying to seal the deal now, with a “trade’ agreement called the Trans-Pacific Partnership. This agreement not only pits American workers against workers in places like Vietnam, it also allows corporations to sue governments for doing things that might hurt profits – like anti-smoking initiatives. They are trying to push something called “Fast Track” through Congress to grease the skids for this agreement.

About Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

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Madeline Messa

Madeline Messa is a 3L at Syracuse University College of Law. She graduated from Penn State with a degree in journalism. With her legal research and writing for Workplace Fairness, she strives to equip people with the information they need to be their own best advocate.