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.