Manufacturing and its myths

Since the time I started covering manufacturing for CTE in 2000, industry professionals have frequently informed me that manufacturing jobs typically pay more than most other professions, such as sales and low-level, white-collar jobs. Furthermore, I was told, they provide a multiplier, or ripple, effect—in which one manufacturing job produces numerous other jobs. 

Lately, however, I’m not sure that’s the case.

For example, in the Grand Rapids, Mich., metropolitan area, 20 percent of the workforce is in manufacturing, a share of manufacturing jobs that is more than twice the national average, reported Don Lee in a June 12 Los Angeles Times article.

At less than 3 percent, unemployment in Grand Rapids is about 1.4 percent below the U.S. average, but wages there, overall, remain relatively low on average. According to Michigan labor statistics, the median hourly rate for production work in the area was $14.51 last year. This amount is what workers in sales positions made and about $2 an hour less than what office and administrative-support jobs paid, the article stated. The median pay for all workers in the area was $16.41 an hour.

The Congressional Research Service reported earlier this year that high manufacturing wages may be a myth. Although the average is a hair higher, with manufacturing jobs paying $26.47 an hour compared with $26.22 for all other sectors, that’s because the sector tends to employ older, more-experienced workers who earn more than younger, less-experienced workers. The CRS report added, “Contrary to the popular perception, manufacturing workers, on average, earn significantly less per hour than workers in industries that do not employ large numbers of teenagers, that have average workweeks of similar length and that have similar levels of worker education.”

In addition, manufacturing in Grand Rapids, at least, seems to have had a limited ripple effect, the Times article stated. Four out of 10 households there cannot afford to cover basic necessities, such as housing, food and health care.

Nonetheless, most Americans feel manufacturing plays a critical role in protecting U.S. economic interests. The 2017 Manufacturing Perceptions Survey from the consulting firm Deloitte and The Manufacturing Institute found that 83 percent of Americans surveyed believe that U.S. manufacturing is vital to economic prosperity, and 81 percent feel that it is important to maintaining their standard of living. In addition, 76 percent think the U.S. should invest further in the manufacturing industry, and an equal number believe that the U.S. needs a more strategic approach to developing its manufacturing base.

With the expectation by 88 percent of survey respondents that future manufacturing jobs will require a higher level of technical skill and 77 percent predicting that those jobs will require fewer manual skills, earnings should rise for manufacturing professionals, along with the multiplier effect. 

Those gains could reverse the sentiment some industry observers have.