Producing Poverty: The Public Cost of Low-Wage Production Jobs in Manufacturing

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From Institute for Research on Labor and Employment

Much attention has been given in recent years to low-wage work in the fast-food industry, big-box retail, and other service sector industries in the U.S. The rise of low-wage business models in the service sector has often been contrasted to business models of the past, when blue collar jobs in the manufacturing industry supported a large middle class in the United States. Recent research by the National Employment Law Project (NELP), however, found that manufacturing production wages now rank in the bottom half of all jobs in the United States. In decades past, production workers employed in manufacturing earned wages significantly higher than the U.S. average, but by 2013 the typical manufacturing production worker made 7.7 percent below the median wage for all occupations. During the same time period productivity in the U.S. manufacturing sector increased at a rate one-third higher than in the private, non-farm economy overall. The median wage for production workers in the manufacturing industry in 2013 was $15.66, with 25 percent of these workers earning $11.91 or less. The NELP researchers also found that, since 1989, there has been a significant increase in hiring of frontline production workers through temporary staffing agencies, where the wages are often lower and the work more precarious. When a day’s labor no longer affords the basic necessities, working Americans rely on public assistance programs funded by U.S. taxpayers to close the gap. Recent research by David Autor and colleagues has documented the impact of increased exposure to trade from low-wage countries on wages and use of safety net programs. In this research brief we estimate the public cost of low wages in frontline production jobs in the manufacturing industry by detailing state and federal expenditures on safety net programs for workers in this industry and their families. This brief is the latest in a series that explores the pressures placed on safety net programs by low-wage industries.

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