The manufacturing industry has seen significant growth in the last few years, but wages are still lagging behind. According to the Boston Herald, wages for manufacturing workers haven’t kept up with other parts of the economy and have lagged so far behind that the average hourly pay for all factory workers this year is less than that of employees in service businesses.
The difference between paychecks is only 9 cents with manufacturing workers bringing in $27.38 an hour and service jobs bringing in $27.47. But the gap is just wide enough to mark a major reversal in historic trends.
The U.S. manufacturing industry is considered the largest in the world, producing 18.2% of the world’s goods compared to the construction industry’s 4% growth between 2017 and 2018.
The manufacturing industry used to be considered a sure ticket to economic security for many Americans. It offered a variety of different jobs including mechanical engineers, instrument technicians, and machine operators.
“Once upon a time it was true,” said Mark Zandi, the chief economist at Moody’s Analytics, “manufacturing was key to the middle class.”
But decades of declining industrial jobs with stagnant wages, widening income disparities, and growing economic problems in smaller cities and rural communities have turned the manufacturing industry on its head.
The manufacturing industry is not only lagging behind in wages but also in the number of available jobs. Manufacturing currently accounts for 10% of private sector employment, a 6% decline from 2000 and a 15% decline from 1980.
“We’ve got to focus on the services,” said Zandi.
Manufacturing is still an important part of the U.S. economy, especially with high-tech goods. And the jobs associated with manufacturing are just as necessary as ever; manufacturing companies estimate that approximately 70% of unplanned equipment shutdowns in the last three years were caused by incorrect lubrication management.
But unlike other industries where job opportunities are currently outnumbering available workers, unemployed workers in manufacturing and construction still significantly outnumber available job openings.
Because of this, Benn Stiel, the economist at the Council on Foreign Relations, says that it may be better for the Trump administration to encourage young people to seek job opportunities in the service sector rather than manufacturing. “Why push people to where jobs are relatively scarce?” said Steil.
Wage gains, like job opportunities, have also been scarce in the manufacturing industry. Payrolls first sank in 2010 by 11.5 million due to the Great Recession. Although they started to climb again, wages hit a wall in 2015.
Since 2016, factory employment has risen 450,000 jobs and industries such as metals and industrial machines have done well. But workers have seen little to no gain in hourly pay since early 2017 and the opening jobs often require an advanced college education.
“The manufacturing sectors that are generating the most job openings have tended to be highly technical in nature, requiring specialized and advanced training,” said a US Department of Labor report.
The workers that manufacturers are trying to recruit for these job openings are also being sought after by universities, the government, and other companies. The competition has contributed to the industry’s employment struggles.