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New manufacturing workers paid more than in other jobs

Keywords: Tags  Manufacturing sector, earnings, new hires, recession, Scott Paul, Alliance of American Manufacturers, Economics and Statistics Administration, Corinna Petry

CHICAGO — New hires in the U.S. manufacturing sector make more money than new hires in other industries, despite a vast number of factory opportunities that have moved overseas since the 1980s, according to a recent Economics and Statistics Administration (ESA) report.

Using the U.S. government’s quarterly workforce indicators, an ESA analysis of earnings of new hires vs. incumbent workers found that manufacturing industry workers have done "particularly well" since the recession began. "At the end of 2011, the manufacturing earnings premium for new hires stood at about 38 percent," ESA researchers said.

Over time, the earnings of new hires relative to incumbent workers have been consistently higher in manufacturing. From 2000 to 2011, the earnings of new hires were about 70 percent of incumbents’ earnings in manufacturing, compared with an average of 60 percent in other industries.

"One possible explanation ... is that as employers hired fewer workers during the recession, those workers who were hired were more skilled," researchers wrote. "If this shift toward more highly skilled hires was more pronounced in the manufacturing sector, then the relative earnings of hires in manufacturing would increase."

"Manufacturing jobs receive premium wages because they require highly skilled workers who drive productivity gains and contribute an outsized share of economic growth," said Scott Paul, president of the Alliance of American Manufacturers.

Since the recession began, average earnings for new hires in manufacturing grew 3.5 percent while earnings of incumbents grew about 2.4 percent.

Jobs in the manufacturing sector are generally considered "good jobs," a source of above-average wages and benefits, full-time hours, and stable employment for millions of Americans, the ESA said.

The decline in manufacturing jobs accelerated during the 2008-09 recession, but since 2010 payroll employment in manufacturing has experienced its first extended period of growth since the 1990s. In addition to the new-hire premium, the study found that for the American workforce as a whole—including new hires and existing workers—earnings were 25 percent higher in manufacturing than in other industries.

"There are too few of these good jobs being created," said Paul. "Hiring in manufacturing has slowed dramatically over the past year."

Paul hopes Congress and the White House will enact public policies—such as infrastructure investment, tax incentives for domestic production, tackling currency manipulation and cutting the trade deficit—that could spur hiring in factories.

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