The State of Industry Labor

by Katrina C. Arabe | August 29th, 2005

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Declining manufacturing employment has been a cause for concern. Learn what the next few years hold and how industry labor compares with the rest of the country’s workforce:

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First the bad news: manufacturing employment is expected to decline over the 2002 to 2012 period by 1%, according to the Bureau of Labor Statistics. (In comparison, total employment for all industry sectors is projected to increase 14.8%).

Now the good news: this rate of decline marks a significant slowdown from the dramatic decrease in manufacturing employment since 2000. It’s well-publicized that the sector shed more than 3 million jobs since that year with manufacturing employment averaging just 14,329,000 during 2004, far below the annual average employment of above 17 million between 1994 and 2000.

Also encouraging: some manufacturing employers are offering higher starting wages as they find it increasingly difficult to get skilled workers for key positions, according to new figures from the Leading Indicator of National Employment, released last week by the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations.

But why is employment growth flatlining, when economists forecast a shortage of workers in the second half of this decade and at a time when industrial production is on the rise?

The simple answer is that U.S. manufacturers are now able to produce more with fewer people. Additionally, this recent article points out that “labor intensive industries, such as textiles, will continue moving factories to low-wage countries” while “manufacturing processes that require only a few skilled workers operating sophisticated machinery” will remain in the country.

Thus, despite the more-robust-than-expected recovery of U.S. manufacturing, most economists and analysts agree: don’t expect an increase in the number of jobs in this sector.

Here are other revealing facts about the state of industry labor from the Bureau of Labor Statistics:

• Last year, there were 1,467 extended mass layoff events in manufacturing, resulting in 254,430 separations of workers from their jobs and 261,897 initial claimants for unemployment insurance. These 2004 numbers are the lowest in the 1995-2004 period.

• In 2004, the unemployment rate of persons most recently employed in manufacturing industries was 5.7%. The overall unemployment rate was 5.5%.

• In the economy as a whole, manufacturing accounts for some 11.3% of all employment, yet less than 5% of all establishments.

• The average weekly hours of production workers in manufacturing hovered around 40.8 in 2004, well above the private industry average of 33.7 for production and nonsupervisory workers.

• Average hourly earnings of production workers in manufacturing were $16.14 in 2004, somewhat higher than the average of $15.67 for production and nonsupervisory workers in all private industry.

• From 2003 to 2004, labor productivity (defined as output per hour) grew by 5.3% in manufacturing.

• The producer price index for the net output of total manufacturing industries increased 4.2% from 2003 to 2004.

• In 2003, there were 420 fatal occupational injuries in manufacturing and 973,600 nonfatal injuries and illnesses. The nonfatal injuries and illnesses incidence rate was 6.8 per 100 full-time workers in manufacturing and 5.0 per 100 full-time workers in all private industry.

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Comments:

john t bevil

August 29, 2005

I would challenge the effect of the numbers to reflect the differnce between the hourly pay of Texicans and California and so on, also the cost broken down by real numbers to show the cost average house payment with 30 year fix, fuel,
electric,water,inshurances and ave yearly food and medical,and where the most of the jobs are going,the numbers your reading are from a starving
country, OOPS you mean The US is Starving
LOVE MOM

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Greasy Gus

August 30, 2005

IIRC productivity measures have a variable known as “Purchased Outside Business Services” included in BLS models. I wonder what happens to productivity figures when that one variable is turned off.

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Jim

August 30, 2005

I have been in the machine tool design for 45 years and I am highly skilled in the field. I am out of a job because of all the automotive tool mfg. is going to china. I am part of the generation the made tooling what it is today. I would like to work for five more years, but in looking for a job all ads wont someone with a collage degree and 2 years experience. I do not have a degree, just 45 years experience. We old people can run circles around degree personal because we worked are way up from the shop floor. If employers need talent in the work force, they should not discriminate the older non-degree talent because they are the mentors for the younger persons coming up in the work force.

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Nick Sevastian

August 30, 2005

Jim, it kills me to see the amount of professional ignorance coming from young “2 years experience” designers and engineers. Personally I am an engineer with 26 years of practice but I would take someone like yourself any day, Don’t loose hope because if you want to work, you will find a place that appreciates your talent and experience, that is if they are looking for talent, efficiency and experience.
If they are going to look for Power Point presentations and Time lines they’ll probably hire the young guys. Sad but that’s the way it is. Nowadays we don’t want to continue this tradition, we export it to China and India. When today’s managers will come back to look for engineering talent here in twenty years from now they’ll find that nobody’s is home.
I grew up not understanding why my parents were saying when they were complaining “what the world got to be these days” but I got to understand today that they were not complaining about the advancements of technology they were complaining about loosing the values that created the conditions for the present progress. Nowadays myself and others I think we argue that instead of using the experience and the best of the older engineering talent together with new technologies the young generation wants to make their own mistakes and they don’t even know what they’re missing.
I told once to my son “only idiots end up to learn from their own mistakes, smart people learn from other people’s mistakes” and I think that should be a lesson for everybody. That includes the managers that outsource to China and India. Please remember that USA helped in the same way, to make Japan the economic power that is today. The difference is that China is still communist and is a giant at least 10 times bigger than Japan.

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Dan

August 30, 2005

The North won the US Civil War because they had the more powerful manufacturing base.
I wonder what excuse our politicians will have when we have finished our headlong rush to go with the cheap labor (Four US dollars per day! Believe me I have visited factories in Shenzhen, Chung King and Shanghai, and asked them the question point blank! How can we compete with that?), and transferred our manufacturing base to China? I particularly wonder what wall of excuses they will rush to build before the American people, when China stops rattling it’s saber and actually moves on Tiawan, and we are too weak industrially to mount significant resistance? By that time, we will not be the “sleeping giant” that Admiral Yamamoto feared at the begining of WWll, but a doddering old fool that the “People’s” Republic of China has carefully, calculatingly moved us into becoming.

I am working with a company which is forced to use Chinese and Indian labor to do our priliminary processing, in order to keep our doors open(thankfully most third world manufacturers, AS YET, still lack the ability to produce fine tolerances and high quality-the only edge we still have). In spite of this stop-gap action, we are still seeing other manufacturers, who purchase components from us, melting away, because they are willing to accept parts of poorer quality, and pass that on their customers, in order to improve their own bottom line.
The author of this piece should really spend a little time closer to the “front lines” of the industrial “battlefield”, rather than relying solely on numbers from the “Bureau of Labor Stastics” and the “Leading Indicator of National Employment”, etcetera.

I once read an article about successful stock purchasing, which suggested that, rather than relying on the myriad,(so-called)”experts” advice, you are more likely to buy healthy stocks by getting out into the marketplace, and following what you see happening “on the ground” (the same sage advice I learned as commander of a combat engineer company while in the Army).

My instincts (or “gut feeling”) in this case is identical to what I have been hearing from my peers in various related industries. I talk to them via email and on the phone everyday, and see them often at trade shows. These are not laborers, but VP’s, CEO’s and owners of small businesses(which comprise the largest employment base in this country). Our concensus is that we will believe the “bleeding” is over, when we actually see that it is over, not when some government sponsored economists predict that it is over.

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Don Bahnfleth

August 30, 2005

The hey-day of Big Business, Big Unions and Big Government brought us here. We have enjoyed unlimited increases in wages until just recently, even though it was becoming apparent as long ago aa the mid-eithties we were pricing ourselves out of the world market. Now to enjoy a reasonable quality of life, most people shop as “discount” stores; and Walmart, Target, etc. While wages were rising, productivity decreasing due to archaic work rules our cost of living was rising to make up the difference. The “golden salary” of the 50′s ($10,000 per year) bought more goods and services than $70 to 100 thousand buys now in American made goods. I am a fan of American made product but must confess the it is difficult to suppress the desire to buy low cost goods from abroad. We could help ourselves by reducing wages and salaries to level that is competitive with people working abroad by taking into account productivity now and working to increase productivity to maintain our edge. A look at European economic history during the past five decades is an eye opener. I would like to think we won’t repeat their experience.

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John Bil

August 31, 2005

American manufacturers are discovering China is not what it’s cracked up to be. Yes labor costs are mere pennies on the dollar, but there are other costs involved too. Transportation, translation mistakes, corruption, poor quality are among the often cited problems. American workers have been sold out for a pot of gold at the end of the rainbow.

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Nick Sevastian

September 1, 2005

Considering that my experience revolves around the Automotive Industry I find that is confusing for the young generation to realize that they can earn more as a CAW worker than if they would if they would qualify and go to school for either a trade or college degree. I would imagine that it takes the wind of the sail of many young people trying to decide what to do with their lives. That might explain in part the difficulty to find “skilled workers for key positions” as mentioned in the article.
Is unfortunate but the so called “craftsman tradition” is vanishing in this country. The pride of making something to the best of your abilities is transferring from our professions to bowling and golfing.
Without manufacturing the country will lose the creative edge that precedes progress.
As a patent owner I can tell you that the days of Tesla, Graham Bell, and even Bill Gates in terms of individual creativity are over. Is very rare nowadays to find a niche where as an individual, one can invent, promote and put together a successful business as it used to be in America a short while ago. Multinational companies are the only ones that have the resources to do all that now, and if is to judge by the trend all these developments, part of processes and technologies are going East to China and India. And don’t tell me that is for our own good to give us competitive prices. In terms of moral integrity, wisdom, and common decency one can look at Enron, and others just in the recent years to get an idea. For Pete’s sake, Taliban was visiting Texas to promote business relations just a few months before 9/11.
My take is that there are a lot of people that don’t like where we’re going, the problem is that nobody can put together a coherent solution, and maybe the solution is in all of us and it means to give the best we can in our professions so that we become once more the best at what we do and nobody can take that job from us.

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John T Bevil

March 3, 2006

Our country is for sale and the low bidder wins outside to get in ? In fact china did not start
the problem your wonderful goverment sold you out
all for the all Mighty Dollar,
we dont build it here anymore we tell them how to, so go learn to sell your self and be a teacher of industry

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