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Lower Wages Propel US Factory Growth

Factory employment in the United States is on its way up. After losing almost 6 million factory jobs from 2001 — 2010, the US has added 340,000 jobs in 2011, and the pace of growth appears to be accelerating. The US currently has 11.8 million factory jobs. The reversal of the decades long slide in employment is largely due to wage adjustments within the sector. Though overall wages have risen from inflation adjusted $23.22 / hr in 2006 to $23.78 / hr in 2011, the industries adding jobs have gone through comprehensive restructurings that have lowered total compensation for production workers by as much as 50%. In non-union positions, which are 89% of US manufacturing jobs, starting wages have fallen from $20+/hr a decade ago to $10-$13/hr.

Combined with steady gains in productivity and traditional advantages in infrastructure and regulation, the United States may have finally turned the corner in competitive manufacturing. Manufacturing expansion in the United States includes companies as varied as NCR Corp., which has moved production of automated teller machines from China to Georgia, Caterpillar Inc. which is building a large manufacturing plant in Texas, and Wham-O Inc., the novelty toymaker, which is bringing 50% of its Hula Hoop and Frisbee manufacturing home from China. Average manufacturing compensation in China was $1.36/hr in 2008, the last year for which credible statistics are available.