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Factory worker pay still better

Published Mar. 9, 2013

WASHINGTON — All things being equal, you'd still rather be a factory worker in America today than a similarly skilled worker in another industry. That's the conclusion of Commerce Department economists, who have combed national statistics and concluded the so-called wage premium in manufacturing is alive and well.

A typical U.S. factory worker takes home higher pay and has better benefits than a comparable worker outside of manufacturing, Mark Doms, the department's undersecretary for economic affairs, said recently. The findings, he said, rebut a simple comparison of hourly wages across industries that appears to show manufacturing workers slipping behind everyone else in the economy after years of earning more.

"When you're trying to compare apples to apples," Doms said, "you do see this manufacturing wage premium has been robust over time."

Manufacturing has been a rare success industry in the recovery from the Great Recession, adding 500,000 jobs since the end of 2009. President Barack Obama often hails it as a vehicle for middle-class prosperity.

From the mid 1970s to the eve of the recession, nonsupervisory workers in manufacturing earned more per hour on average than the national average for all industries. During the recession and in the years that followed, however, hourly manufacturing pay fell behind the national average. In January, the average hourly wage for a manufacturing production worker was $19.23, compared with $19.97 for the private sector as a whole.

Commerce economists say the full picture is more complicated — and more favorable to manufacturing. They calculated in a report last year that medical and retirement benefits are 60 percent more lucrative per hour for factory workers than nonfactory workers. When they compared workers with similar skills across industries, they found wages and benefits added up to a 17 percent advantage for manufacturing employees, an advantage that has held even as industry employment has shifted away from union jobs to lower-paying nonunion ones.

Doms says there are several explanations for that premium. Factory employees tend to work more hours per week and more weeks per year than other workers, he said, a difference that adds up — just like the compensation premium — to 17 percent.

If you include supervisors, who earn more than nonsupervisory workers, factory employees earn more per hour than nonfactory workers, he said.

Perhaps the simplest, time-tested explanation for why manufacturing jobs pay a premium is that the industry boasts consistently high productivity. There was new evidence of that in Labor Department statistics released Thursday. They showed manufacturing productivity increased by 2.2 percent last year, compared with 0.7 percent for the private sector as a whole.

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Correspondingly, real hourly compensation for factory workers rose 0.2 percent for the year. Across the private sector, that compensation fell by 0.6 percent.

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