Manufacturing has been a bright spot over the past year in terms of jobs gained. Activity has picked up, and factories are coming back on-line. The problem is that this has come at a cost. Specifically, the US manufacturing jobs of the future feature lower pay and benefits.
That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so.
The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff — with the additional concession that the newcomers will not catch up for the foreseeable future. Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.’s director of collective bargaining.
“Some companies want to keep work here, or bring it back from Asia,” Mr. Pavy said, “but in order to do that they have to be competitive in the final prices of their products, and one way to be competitive is to lower the compensation of their American workers.”
Hourly pay has leveled off as a whole, because of legacy hires and two-tier wage structures. But eventually they’ll cycle through, and factory jobs will not be middle-class jobs anymore.
The argument from business is that US wages are not competitive globally, and the only way for factories to survive here is through slashing costs. First of all, this comes from companies that are posting record profits, and native plants already save on shipping. Second, there are plenty of examples across the world of export-based countries who are more generous to their workers and can sustain a large manufacturing base. Germany, where auto workers make twice as much as in the US, comes to mind.
Third, the real problem for keeping manufacturing in the US has nothing to do with wages and everything to do with health care. The depressed wages merely reflect the outsized costs of health care, which grow every year. If we had a sane health care system, we could maintain the wage structure of the recent past and our manufacturing base while delivering the same quality of care. And until we really attack the source of the problem, those skyrocketing health care costs, wages will continue to be clawed back.
Maybe this changes slightly as jobs become more competitive when falling unemployment makes jobseekers less desperate. For now, you’re seeing factory jobs, outside of specialists, paying not a whole lot more than the McJobs in the service sector. Certainly they’re not paying entry-level wages consistent with raising a family. We have a terrible unemployment problem right now. But the crisis of falling or stagnant wages will reverberate into the future.



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I don’t understand the “competitive” thing big biz keeps saying. They outsource jobs to be “competitive” and the prices never go down. Only up! Along with the upper exec’s pay. You can’t have an economy (or a country) function if 90% of the population is making $2.50/hr (just an ex. and not a blanket statement).
Make your products elsewhere where people aren’t being paid enough to buy them, ship them back here where you fired 5,000 workers like every other company and only you and your cronies can buy them. This is not sustainable capitalism, it cannibalism!
I’ve heard that working conditions are deteriorating, too, along with pay. People have told me about bizarre ‘voluntary’ overtime requirements, truncated ‘break’ times, speed-ups and crummy, stifling, dirty work places.
I think we are in a time machine, headed back to the 19TH Century.
Well now, why doesn’t the government take over these guys and hire some of the unemployed? O wait that would be socialism, I guess? Who really gives a shit.
Hey, assume a husband and wife are working and they have a couple of kids. That family would have four wage earners.
Ooops, I just gave away Gingrich’s economic plan!
Instead of slashing workers’ wages, how ’bout dramatically slashing the honkingly gi-normous salaries, perks, benefits and ridiculously inflated “bonuses” lavishly handed out to the Execs at the top of the compnaies in question???? That would save quite a few buck$$ and make the companies more competitive, while enabling the workers to make enough to buy the shit that they’re producing.
Too many citizens are dramatically unaware of how honkingly huge Exec. & CEO benefits packages have become, and let’s not forget that if one these over-paid shit-heads goofs up, then get paid out million$$$ for the honor of being “fired.”
The 1% has truly bamboozled the populace by getting them to accept that it’s all the fault of workers’ wages. At my part-time job now, I am paid on par with workers in Indonesia (having read an article recently about what they make). I don’t rely on this part-time work’s pay to survive, but many of my co-workers do. And they aren’t living in low-cost-of-living Indonesia (for example; I’m sure there’s many others).
The race to the bottom continues!
New rule, any business paying the min wage must hire 5% more people or become a government enterprise.
Sooner or later the prognosis for the American worker is going to have to change. If anything, the American population will eventually cease broadly tolerating the continued reduction of our economic security and well-being. Eventually, something big is going to break here. I have no idea what, but something big will have to break.
You bet and increase the min wage by a dollar. Hamburgers go up but why not?
OWS is just the small beginnings of the shit storm on the way.
I guess we just don’t have enough poverty for the plutocrats. They put out the word.
To quote another post, “Mr. ShitStorm, meet Mr. Fan…”
I couldn’t agree more – Occupy Wall Street was a group hug in comparison to what eventually could emerge.
The laws of economic gravity are taking hold and things quite have taken on a life of their own. It seems very unlikely that the plutocracy will voluntarily change its approach to owning its plantation.
The US still has a broad middle class not largely in complete crisis. If and when that changes – when the target consumers for the electronic devices, car purchases, and four-dollar espresso beverages no longer has sufficient security, the action will begin.
Know how else they could be competitive? Accept a smaller margin of profit. Then their employees could afford to buy their products.
Just sayin’.
Talkin’ bout a revolution!
:)
BK wrote: Make your products elsewhere where people aren’t being paid enough to buy them, ship them back here where you fired 5,000 workers like every other company and only you and your cronies can buy them. This is not sustainable capitalism, it cannibalism!
———-
That SEEMS pretty damned obvious to ME. Why can’t American corporations understand that???
Well you know
We’d all want to change the world
Rule of thumb used to be you can afford a house worth 2 1/2 times your yearly salary.
$600 X 52 = $ 31,200 X 2.5 = $ 78,000. Can you buy a house for $ 78,000 anywhere in America where they are paying these slave wages?
LMAO!!
People are unaware of just about everything that matters. National TV and radio no longer give us the news, just entertainment and speculation if not outright lies. We need to keep spreading real information via the internet (before the gov’t shuts us down).
That’s what they say my $138,000 house is worth. Fortunately, it’s paid for.
I draw a different conclusion:
There can be no labor movement at the present time without a MOVEMENT OF THE UNEMPLOYED.
It’s time for organized labor to get into this fight!
Get us National Healthcare drug price controls and tariffs on all goods problem solved.
I agree. Labor has snuggled much too closely with the PTB.
So we can expect the housing market to fall to this natural level? Banks I bet are still listing homes as assets on their books at Pre crash levels.
It looks like that is not going to happen anytime soon. I do wonder who if anyone is buying bank home loan debt.
Actually,
I have a 2000 sq. ft. two story home worth $77,500.
Town is county seat pop.2500. Cost of living nil. Great schools. Accountable local officials(Honest as well)
And gettin tired of being stereotyped as rubes cuz of Michelle Bachman and all the crazy Evangelicals.
“Is this heaven? No its IOWA.”
(Field of Dreams is just down the road.) *G*
http://www.realestateabc.com/outlook/overall.htm
Tjbs using your formula and this data the banks are over valuing homes around 100% on their books.
The prime example of rising prices no matter what is women’s skirts. When the skirts were knee-length the price was X. As the skirts got shorter, the prices kept going up (for example X+$5, X+$10) because they “required more work.” As the skirts started getting longer, the prices continued to go up because “more material was used.” The rule is that any change requires a price increase. If the work is now done overseas, raise the price because of shipping, if the work is returned to the US, raise the price because of higher wages, and on and on….
I’ve always been puzzled as to why US companies didn’t push for single payer or other REAL reforms in US health care. Are they all so bought off @ the top that they don’t care? Are they getting their bonus and retirement payments “up front,” so that the enterprise doesn’t have to be viable after their departure to pay them?
I dunno: maybe they figure that all they have to do “for the health of the company” is to shift all the costs of health care to employees But as someone said above, if your employees don’t have adequate income to buy your product, and what “savings” they have are decimated by health care costs [or supporting their unemployed kids; or attempting to put those kids through college], how are you going to have a “going business” — for yourself even [Mr. Executive], let alone the “good” of your community and country?
It seems you have a very low priced home way below the national average the old pre housing market formula for homes people can afford is based on 2 1/2 times your yearly salary.
Whats the average salary where you live? If home prices match that and yours is the average home price then a bottom has been reached in your housing market which would be interesting and would scare the banks if other markets were to reach a bottom in their housing markets.
What factor’s made your market reach bottom before other markets and is the trend spreading would make a great diary. Local real estate market news gossip from neighbors trying to sell homes would give the diary much more than we can get from google searches.
Of course your housing market might still be over valued.
I think they use higher healthcare costs to justify outsourcing once American wages are low for everyone then they will push for national healthcare for even more savings.
I hope I worry they will invest in insurance companies and want to keep those profits.
Toyota moved a factory to canada, from the USA a few years ago, one of the main reasons…. our healthcare.
vampire squid is the best phrase of its kind to come along in a long time.
It describes the economic/political system in the USA perfectly.
Spot on comment -”The prime example of rising prices no matter what is women’s skirts. When the skirts were knee-length the price was X. As the skirts got shorter, the prices kept going up (for example X+$5, X+$10) because they “required more work.” As the skirts started getting longer, the prices continued to go up because “more material was used.” The rule is that any change requires a price increase. If the work is now done overseas, raise the price because of shipping, if the work is returned to the US, raise the price because of higher wages, and on and on….” – because the CEO needs his bonus and lower taxes to maintain his multiple homes, boats, friends with benefits – and no other CEO could run the company as well – by definition all CEOs are an “above average CEO” whose pay must be raised when last year’s average CEO pay is published.
Indeed David’s comment is also spot on: “The argument from business is that US wages are not competitive globally, and the only way for factories to survive here is through slashing costs. First of all, this comes from companies that are posting record profits, and native plants already save on shipping. Second, there are plenty of examples across the world of export-based countries who are more generous to their workers and can sustain a large manufacturing base. Germany, where auto workers make twice as much as in the US, comes to mind.”
Of course David’s facts will never come out past the lips of Rick Santelli of CNBC – or be spoken by anyone else at CNBC – or even MSNBC or CNN.
Our lack of a national health care “Medicare for All” basic benefits plan with a national budget and price controls for those basic benefits (with corresponding reduced costs for becoming a doctor and for prior medical school loans) does indeed add a lot – in some cases double – the effective wage cost for products made in the US.
But Obama went with the GOP plan so as to at least get the check mark for universal health care on his write-up in the history books, plus it did not really annoy the insurance companies to be given a $600 billion welfare check.
Diary! going upstairs now
I think that’s based on the old “Enron” formula called “mark to fictional market” accounting. Loans are listed as “income” or “assets” and all assets are listed on the books at twice what they are worth. For the benefit of the stockholders dontcha know.
Joe Kernan, the CNBC analyst, has written a book with his 11 yo daughter defending capitalism. The book is Your Teacher Said What? The first point that he raises is that the banksters didn’t cause the latest recession, and that there is a lot of blame to go around. I found it hard to read more, but in the community interest I did.
You will be glad to know that 0 is anti-business. he is totally a collectivist. Collectivists, that is, unions are totally responsible for the problems in the US. Perhaps there is something to redeem the book, but it seems to be just more propaganda from the 1%, which is where Kernan is firmly fixed.
by the time that happens, we will have regained our psychic ability.
Pitchforks – also known as sharpened farm implements. Most bullies do not attack farmers carrying pitchforks, which are legal to carry and require no registration with Homeless Security.
I’ve said that for awhile. If median is around $40,000 then why the hades is median housing 5 times that?
I guess I left most of the writing to his 11 year old. Only someone really young would place no blame on the guys who had the authority to hand out the money.
David,your causation is flawed.Granted, single-payer would radically reduce costs of labor,but the savings would not retain decent wages without the corporation being sued for breaching its fiducial obligation to maximize shareholder wealth .Corporate globalization is degenerate economics premised on treason .You can’t reform an economic paradigm that we were meant to serve as opposed to one designed to serve us .How could we possibly thrive with a nefarious system underlying which trade circularity forces us to compete against our own subsidies .
As a microcosm,think of our subsidizing a prison industrial complex from which millions of slave-made goods enter the economy via the Fortune 500 to compete against small- business underwriters .
It’s all moot. The MOTU have moved on. There’s billions of people on this planet to still be exploited and trillions of dollars of wealth to steal. The BRIC’s are next in line.