American Manufacturing Workers Still Enjoy a Compensation Premium Over Other Similar Workers

By Economic Policy Institute

In a new paper, EPI Distinguished Fellow Lawrence Mishel finds that, although the increased shift in manufacturing work to temporary staffing agencies has eroded manufacturing pay and job quality, manufacturing workers still earn 13.0 percent more in hourly compensation than comparable private-sector workers. This manufacturing premium, however, has declined by about one fourth (3.9 percentage points) since the 1980s, when it was 16.9 percent.

The manufacturing premium has eroded as manufacturing firms respond to competition by squeezing workers and suppliers—paying lower hourly wages and increasingly using lower-paid staffing agency workers. The wage advantage of workers directly employed in manufacturing has fallen from 14.7 percent in the 1980s to 10.4 percent in the 2010s, which represents a significant decline (of 4.3 percentage points or about 30 percent), but which still constitutes a substantial manufacturing wage premium. Meanwhile, staffing and temporary help services provided 11.3 percent of all manufacturing employment in 2015, up from just 2.3 percent in 1989. The increased use of workers through staff intermediaries lowered the manufacturing compensation premium by 4.0 percent in the 2000s.

“We should not give up on U.S. manufacturing, which is still a source of better-paying jobs,” said Mishel. “But because there is less of a pay advantage in manufacturing than there used to be, policies to expand manufacturing employment should be coupled with policies that make those jobs good jobs.”

The notion that manufacturing is a source of good jobs has been challenged most prominently by a 2017 Congressional Research Service (CRS) report, which claims that the manufacturing compensation premium has disappeared. Mishel estimates the manufacturing premium by comparing the wages manufacturing workers earned to other comparable workers in the private sector, and then adjusting for the benefits earned and the impact of increased use of staffing firms (which is not completely captured in the underlying data). The resulting manufacturing compensation premium identified by this analysis, 13.0 percent in the 2010s, definitively refutes the CRS claim that the manufacturing compensation premium had disappeared.

The erosion of the manufacturing wage premium has been partially offset by improved benefits. Manufacturing workers have an advantage in benefits, primarily in insurance and retirement benefits, and this advantage grew between 1986 and 2017.

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Union Matters

Uber Drivers Deserve Legal Rights and Protections

By Kathleen Mackey
USW Intern

In an advisory memo released May 14, the U.S. labor board general counsel’s office stated that Uber drivers are not employees for the purposes of federal labor laws.

Their stance holds that workers for companies like Uber are not included in federal protections for workplace organizing activities, which means the labor board is effectively denying Uber drivers the benefits of forming or joining unions.

Simply stating that Uber drivers are just gig workers does not suddenly undo the unjust working conditions that all workers potentially face, such as wage theft, dangerous working conditions and  job insecurity. These challenges are ever-present, only now Uber drivers are facing them without the protection or resources they deserve. 

The labor board’s May statement even seems to contradict an Obama-era National Labor Relations Board (NLRB) ruling that couriers for Postmates, a job very similar to Uber drivers’, are legal employees.

However, the Department of Labor has now stated that such gig workers are simply independent contractors, meaning that they are not entitled to minimum wages or overtime pay.

While being unable to unionize limits these workers’ ability to fight for improved pay and working conditions, independent contractors can still make strides forward by organizing, explained executive director of New York Taxi Workers Alliance Bhairavi Desai.

“We can’t depend solely on the law or the courts to stop worker exploitation. We can only rely on the steadfast militancy of workers who are rising up everywhere,” Desai said in a statement. 

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