Manufacture This

The blog of the Alliance for American Manufacturing

But rise of companies using temp workers is driving down the compensation premium.

We have good news and bad news.

The good news? A new study finds that manufacturing still punches above its weight when it comes to wages. Factory workers earn 13 percent more in hourly compensation than other workers in similar private-sector fields, according to the Economic Policy Institute (EPI) study, continuing a long-standing trend that manufacturing offers Americans good-paying work that also serves as a pathway for many to join the middle class. Manufacturing workers also enjoy an advantage in benefits, including when it comes to health insurance and retirement.

Now the bad news: The manufacturing wage premium has eroded over the years by about one-fourth. The reason? More companies are relying on staffing agency workers, who accounted for about 11.3 percent of all manufacturing employment in 2015 (compared to just 2.3 percent in 1989). 

"We should not give up on U.S. manufacturing, which is still a source of better-paying jobs," said Lawrence Mishel, an EPI Distinguished Fellow and author of the study. "But because there is less of a pay advantage in manufacturing than there used to be, policies to expand manufacturing employment should be coupled with policies that make those jobs good jobs."

There's actually been a bit of a debate happening as to whether manufacturing workers continue to enjoy higher wages compared to those in similar fields; a recent report by the Congressional Research Service suggested that they do not, for example.

In his study, Mishel examines that CRS report, along with similar studies from the Commerce Department and McKinsey Global Institute. He estimates the manufacturing premium by comparing the wages factory workers earn to other comparable private sector workers, and then adjusted for the benefits earned and the impact of increased use of staffing firms — something that EPI notes is not "completely captured in the underlying data." 

Click here to read the report.