Think only fast-food workers are stuck in low-wage jobs and forced to get food stamps? Now a stunning number of manufacturing jobs pay poorly, too. Taxpayers subsidize company profits.
Think manufacturing jobs and you think of Boeing’s workforce in the Puget Sound region: well paid, good benefits, union representation, the bedrock of the old American middle class.
But a new report from researchers at the University of California at Berkeley indicates this is increasingly the outlier in U.S. manufacturing. It also raises questions about returning manufacturing jobs to the United States as a simple fix for rising income inequality.
The report found that from 2009 to 2013, the federal and state governments spent $10.2 billion annually on social safety net programs for workers and their families in frontline factory jobs.
These include food stamps (the Supplemental Nutrition Assistance Program, or SNAP),basic household income assistance (Temporary Assistance for Needy Families, or TANF), Medicaid, Children’s Health Insurance Program (CHIP) and the Federal Earned Income Tax Credit (EITC). The study was first reported in the Washington Post.
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The primary cause: low wages.
Historically, this socialization of labor costs by forcing employees on food stamps, etc., and privatization of profits to shareholders was found in services (think Wal-Mart). But the trend has migrated into manufacturing, which once paid significantly more than most service jobs.
Pay for production jobs by 2013 ranked in the bottom half of all jobs in the United States, according to research from the National Employment Law Project. It was 7 percent below the median wage for all occupations. A quarter of production workers made less than $11.91 an hour. Another factor has been the rise of staffing agencies rather than companies hiring and paying their own workers.
The Cal-Berkeley report states, “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.”
Not surprisingly, Washington has among the lowest participation in these programs, at 25 percent vs. a national 34 percent. Mississippi, Georgia, California, Texas and Arkansas suffered the highest levels (59 percent in Mississippi).
Even so, aerospace here is not immune to the problem. As my colleague Dominic Gates reported, one-third of aerospace workers outside of Boeing earned between $10 and $15 an hour in 2013. Yet these companies are able to take advantage of state tax breaks intended to preserve well-paying jobs in Washington.
Today’s Econ Haiku:
Antitrust comes back
Staples and Office Depot