White-Collar Manufacturing Jobs Still Pay Well, But the Wages of Workers on the Factory Floor Have Not Kept Pace
New research from the Federal Reserve Bank of Cleveland shows that the difference between manufacturing wages and wages in other sectors—the manufacturing wage premium—has declined over time.
In a new report, Cleveland Fed researchers Joel Elvery and Julianne Dunn document the decline in the manufacturing wage premium between 1979 and 2018 and compare the wage premiums of manufacturing workers in production occupations (those who operate machines and assemble products) to those of manufacturing workers in nonproduction occupations (such as sales representatives, engineers, and other office workers).
“We find that the wage premium for each group has fallen during the period we study, but it fell more sharply and further for production workers,” say the researchers. “As a result, the production-workers’ wage premium was 4 percent during 2015 to 2018, while the nonproduction-workers’ wage premium was 14 percent.”
The authors argue that this broad-based decline, both demographically and geographically, was most likely caused by the loss of manufacturing production jobs, which put downward pressure on wages for this work. The decline in manufacturing wage premiums has important implications for the difficulties associated with recruiting manufacturing workers and for public investment in training for manufacturing jobs.
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia. For more information, go to www.clevelandfed.org or follow us on Facebook, Twitter, Instagram or LinkedIn.