A new study conducted by researchers at the University of California, Berkeley shows that over one-third of manufacturing workers in the U.S. are on some form of public assistance. The percentage shoots up to 50% when temporary manufacturers are factored in.
The results of the study follow similar ones that show a high percentage of fast-food and retail workers on public assistance such as food stamps and Medicaid. But the findings on manufacturing workers are eye-opening because those jobs are so often extolled as being the highest-quality jobs available for non-college-educated workers.
“Manufacturing has long been thought of as providing high-paying, middle-class work, but the reality is the production jobs are increasingly coming to resemble fast-food or Walmart jobs, especially for those workers employed through temporary staffing agencies,” said Ken Jacobs, chair of the Labor Center and co-author of the report.
Not only do politicians frequently talk about the importance of strengthening manufacturing in industrial states like Michigan, Ohio, Indiana, Pennsylvania and Wisconsin, but state governments typically come up with huge incentive packages to companies for locating a new manufacturing facility in their state. But the University notes that manufacturing jobs are costing tax-payers $10.2 billion.
The report analyzed utilization rates and costs in the five largest means-tested public benefit programs for which data is available: Medicaid, the Children’s Health Insurance Program (CHIP), the Federal Earned Income Tax Credit (EITC), food stamps (the Supplemental Nutrition Assistance Program, or SNAP), and basic household income assistance (Temporary Assistance for Needy Families, or TANF).
These kinds of revelations have been fueling the movement to a higher federal minimum wage, and is often cited for helping to drive the Presidential candidacy of Senator Bernie Sanders, whose primary platform plank is income inequality between white collar and blue-collar workers.
The UC-Berkeley researchers report that the largest classification of temporary manufacturing production workers—assemblers and fabricators—earn a median wage of $10.88 an hour, while those hired directly by the companies make an average of $15.03.
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That manufacturing employees make about the same as retail workers on average is surprising to many. But as companies have been off-shoring more and more of these jobs to Mexico, China and other low-wage countries, fewer manufacturing jobs are unionized, and even the unions have negotiated lower wages in many cases in exchange for keeping jobs in the U.S.
In the U.S., experienced United Auto Workers members, for example, make an average $28 an hour, while new hires, known as “Tier 2,” workers start at $15.78. UAW members have not had a raise in a decade. Autoworkers make $8.24 an hour in Mexico and $4.10 in China, according to Center for Automotive Research data.
These wages are staying constant–and falling in some cases compared with with where they were a decade ago–while the costs of living are not. According to the Consumer Price Index, prices of staple expenses have kept climbing during the last decade–beef is up 56%; fresh vegetables are up 28%; milk is up 14%. Healthcare costs have climbed faster than inflation in that time. The average cost of a new car has climbed 20%. And so on.
Walmart, it was reported by UC-Berkeley two years ago, underpay their workers relative to average retail workers. Walmart workers, the university’s study reported, absorb some $6.2 billion a year in public assistance. Earlier this year, Walmart boosted the average salaries of its full-time workers from $13.00 to $13.38, and the average salaries of part-time workers from $10.00 an hour to $10.58. That is still lower than most retail workers, whose average salary is $14.95 per hour.
Income inequality is an election year issue that many political analysts have directly connected to the rise of both Bernie Sanders and Donald Trump as viable candidates for the White House. According to Emmanual Saenz, an economics professor at UC-Berkeley, says income inequality has been steadily rising since the 1970s and is at its greatest level since 1928. Saenz defines “income” as pre-tax cash market income — wages; dividends, interest, rent and other returns on invested capital; business profits; and realized capital gains. Excluded are Social Security payments, unemployment benefits and other government transfer payments, which are more substantial today than before the Great Depression.
In 1928, the top 1% of families received 23.9% of all pretax income, while the bottom 90% received 50.7%. By 1944, the top 1%’s share was down to 11.3%, while the bottom 90% were receiving 67.5%, levels that would remain more or less constant for the next three decades. In recent years, the disparity has gone backward with the top 1% receiving nearly 22.5% of all pretax income, while the bottom 90%’s share is below 50% for the first time ever.
Even if manufacturing were to make a comeback in the U.S., most of the jobs would likely be non-unionized. Trade agreements like the North American Free Trade Agreement, give companies a cudgel–moving jobs to Mexico– to beat down manufacturing wages in the U.S. With fuel prices relatively low, the cost of making and then transporting goods made south of the border, for example, is still far cheaper than making most goods in most U.S. states. And with U.S. healthcare costs continuing to rise faster than other countries, the total cost of manufacturing employees in the U.S. to their employers is not very competitive with countries that have national healthcare.
Despite the pressure on manufacturing employees, the trade group representing manufacturers across industries, the National Association of Manufacturers (NAM), defends these jobs as being the best path forward for a large chunk of the working population. "Manufacturers offer employment to over 12 million Americans, and while some studies might suggest otherwise, the indisputable fact remains that manufacturing jobs are a pathway to the middle class," said NAM Chief Economist Chad Moutray. "According to the Bureau of Economic Analysis, the average manufacturing worker in the United States earned $79,553 annually in 2014, including pay and benefits. That's over $15,000 a year more than other industries. In addition, over 92 percent of manufacturing employees were eligible for health insurance benefits in 2015. With the right action from policymakers, manufacturers can continue to grow and make this pathway available to even more Americans."
Of course, many households are not earning "average" pay for the industry. And those earning below the averages, despite working full-time, are turning to the government for help.
This story was updated on 5/12 to reflect a quote from The National Association of Manufacturers.
