McFeatters: Worker output up, but not pay
Employee Marline Starling works on the production line at the General Motors Co. assembly plant in Lake Orion, Mich., (Feb. 21, 2012). Credit: Bloomberg News
American manufacturing, pretty much left for dead a few years ago, is undergoing a heartening renaissance.
Factories are rehiring; there is even a shortage of workers for some skilled jobs. Plants that fled to low-wage countries are returning home, where they are newly competitive, in part because of wage growth in such usual low-pay havens as China.
Since 2001, output per hour in manufacturing has risen over 40 percent. But those blessings have yet to flow to manufacturing workers, whose wages have risen only about 10 percent in that time. And many workers' pay is not keeping up with inflation, amounting to a pay cut in real income.
Some of the increased productivity is due to the scare thrown into the workforce by the recession and high unemployment, but not entirely: Output increased about 13 percent in the last five years, but about 21 percent in the five years before that.
According to The Wall Street Journal, there was a 35 percent decline in manufacturing jobs between 1998 and 2010. Since then, the number of jobs, as of April, had increased 4.3 percent to 11.9 million. But after peaking in 2009, wages averaged $19.15 an hour, back to where they were in 2000 in inflation-adjusted terms.
The Journal points out that the recession gave management the upper hand in asking their workforces to relax work rules and accept flat or reduced wages and benefits. It also led to the introduction of a two-tier wage system. In one Michigan plant, new hires are paid $10 an hour. Had they been lucky enough to have been hired before 2008, they would be getting $18 an hour.
It's not unreasonable to project that this growing disparity between pay and productivity might be self-defeating if it doesn't self-correct. Consumer spending is what drives the American economy, and if workers don't spend because they can't afford to, the recovery could slow and even stop.
Henry Ford had the genius to pay his workers enough to buy the cars they were building. The economy is no longer that simple or straightforward, but the principle holds.
Dale McFeatters is a senior writer for the Scripps Howard News Service.
