What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz

It's hard to earn a decent living in manufacturing

Posted by: Adam Belz under Business trends, Economics Updated: November 30, 2012 - 12:50 PM
Mark Dauer uses a grinder on a welding project at Code Welding in Blaine, Minn. (Richard Sennott/Star Tribune)

Mark Dauer uses a grinder on a welding project at Code Welding in Blaine, Minn. (Richard Sennott/Star Tribune)

The Atlantic has a new story touting the return of manufacturing to American shores, as the price for natural gas falls in the U.S. and as wages rise in China.

The piece prompted Felix Salmon at Reuters to write that yes, jobs may be returning to a General Electric plant in Louisville, Ky., but 70 percent of them start at $13.50 per hour, compared to $21 per hour in the good old days of making appliances in the Ohio River valley.

“There’s a huge difference between $13.50 per hour and $21 per hour: the latter is something you can actually live on, something you can consider to be a career. The former is not,” Salmon wrote.

Salmon points to the Hostess bankruptcy as another example of measly pay for manufacturing workers, and cites a story by Adam Davidson for New York Times Magazine titled “Skills Don’t Pay the Bills.” We did a similar story in August. So have other publications.

The argument, which now seems superficial to me, is that if there were a skills gap, wages would be rising. Supply and demand. And yet, average wages in many manufacturing positions are not rising. They’re stagnant. The problem is a pay gap, say Davidson and others (including Steve Hine at DEED).

"The secret behind this skills gap is that it’s not a skills gap at all," Davidson writes. To make the point, he roughs up the CEO of a metal fabrication firm near Milwaukee:

Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour.

This summary is probably an over-simplication, says Dick Longworth at the Chicago Council on Global Affairs. Pay at Isbister’s company varies widely. A worker with four or five years of experience can make $45,000 per year, which is about $21.60 per hour. Top performers can make more than $50,000 per year.

Longworth's assessment is more nuanced, but no less grim:

The good old days, when steady but unspectacular work and ordinary skills paid a living wage, are gone. Top performers can do very well. Average performers don't even get hired. This isn't news. But it needs to be hammered home that, as things stand now, many workers will never have a decent job and most workers can never aspire to a middle-class way of life based on manufacturing.

So it’s complicated. What manufacturers mean when they talk about a skills gap is probably much more specific than we tend to think. Factory owners can find 200 candidates for any one job, but what they need is 15 men and women with technical skills, imagination and initiative to help them build a successful business. Those they can't find.

The market should work itself out eventually. It looks like people who add value to manufacturing can still make a decent living. It’s just not clear how many of those people our economy has room for.

 

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