Surprisingly, the United States ranks only 12th in wages out of the top 20 countries where manufacturing activities are a major part of their economy. The wages for hourly workers are $23.22 with average total compensation of $35.67. These rates are behind those paid by Canada, Ireland and France. This is according to a report released in December 2012 by the U. S. Department of Labor’s Bureau of Labor Statistics for 2011. These numbers are down from 2010 by a few cents, but more importantly they did not rise from 2010.
According to the renowned labor expert Richard Florida, manufacturing compensation is closely related to productivity, overall human development, and basic happiness. Florida believes that total manufacturing compensation rises as nations become more industrial. He also believes that higher manufacturing compensation is also the basis for lower levels of inequality and higher levels of satisfaction and happiness.
The total benefits segment of hourly compensation costs can be seen by combining social insurance costs with directly-paid benefits. In 15 of the 20 countries, total benefits are more than 40 percent. In the U.S. it was about 33 percent for 2011 according to the Bureau of Labor Statistics.
More importantly, the decline in unit labor costs is a striking factor. In terms of each unit of production, for example one refrigerator, the wages and benefits invested in each unit have fallen in eight of the past 10 years for a net decline of 13.6 percent, the Bureau of Labor Statistics reports. Although increased productivity was an important part of this decline, the decline is still the greatest in such a relative short time since the Bureau of Labor Statistics began tracking the number in 1951.
The two tier wage system is spreading through the manufacturing industry. A new generation of manufacturing workers and some workers who are returning to their jobs are finding that they must start at the lower tier of a two tier wage system, and they will likely stay in the lower tier for their entire career, according to the New York Times. The Times cites a GE manufacturing facility in Louisville that had 2,500 employees in 2005 from a high of 17,000 in the 70s, and productivity has increased. The Times cites an employee who was making $22 an hour and they are now making $15 an hour in a Louisville automotive plant. Many manufacturing facilities have adopted the two tier wage system and employees do not seem to be complaining about it; at least not publicly. In a city where several thousand people apply for a $13 an hour job, it is unlikely that there will be much complaining.
The good news is, according to the New York Times, both GE and Ford are bringing jobs back to the U.S. from ASIA. The bad news is these jobs will never pay what they did when they left.
You would think Americans must be tiring of their lack of progress. The disposable income of families in the middle of the income distribution shrank by 4 percent between 2000 and 2010, according to data compiled by theOrganization for Economic Cooperation and Development (O.E.C.D.). In Australia disposable income increased 40 percent. Middle-income Germans, French, Danes, Dutch, Norwegians and even Mexicans gained more ground according to the O.E.C.D.
The best advice for workers in the lower tier is to get some training that will make you more valuable in the future. Computer aided design and manufacturing, and machining by computer are two areas worth exploring.