Factory wage gains lag behind fast food restaurant growth

Compensation for factory jobs has grown so slowly in the United States that manufacturers are struggling to compete with fast food restaurants.

Ann Harten, head of human resources at furniture maker Haworth Inc., said her company is looking beyond unemployment lines and must hire candidates far from their current jobs as the economy recovers and the market labor is tightening. “We have competition for labor outside of our industry,” she said.

For years, factory jobs paid significantly more than those in many other fields, especially for less educated workers. That is about to change, according to economists, manufacturers and federal data.

A worker at the Gentex Corp. plant. in Zeeland, Michigan. The share of American workers employed by manufacturers has fallen to less than 9%, from more than 20% in the early 1980s

Haworth raised wages at factories near its headquarters in Holland, Mich., To $ 15 an hour, plus another dollar for the night shift. It has amenities like a 24-hour gym as well as annual Thanksgiving turkey and Christmas presents. Haworth still cannot find enough workers. This could dampen production at a time of high demand for furniture, vehicles and many other consumer goods.

Some workers recently left the Haworth factory in nearby Ludington for hospitality jobs, Ms Harten said. Haworth advertises assembly jobs for $ 14 at this facility, the same starting rate of pay at a nearby Wendy’s restaurant. “Manufacturing can be taxing,” said Ms Harten, who also believes improving Covid-19 unemployment benefits discourages some people from taking open jobs.

Dana Hiltunen has spent the last two summers working in a Herman Miller Inc.

MLHR 5.14%

office furniture factory in Zeeland, Michigan, earning about $ 13 an hour through a recruiting agency. Ms Hiltunen said she enjoys the job – attaching soft bumpers to tabletops – but wearing a mask all day in a fan-cooled facility isn’t always easy. Sometimes in hot weather the company would hand out popsicles, she said.

Recently, she started as a salesperson at a home appliance store where she writes invoices and answers the phone for $ 16 an hour. She hopes to land a job in marketing, a subject in which she has a university degree.

“He has upward mobility, in terms of compensation,” she said of office work.

Since the start of 2020, jobs in many industries, including restaurants and retail, have posted their highest hourly wages on record compared to wages in manufacturing, according to an analysis of federal data from The Wall. Street Journal. The $ 23.41 factory workers earned on average in April is 27% more than the average salary of retail workers, according to the Labor Department, down from a 40% premium for retail workers. factory workers 10 years ago. Factory work pays 56% more than restaurant and fast food restaurant jobs, the data shows, up from 83% a decade ago.

“Workers in some of these low-wage industries are demanding and get better wages,” said Lawrence Mishel, an economist at the Economic Policy Institute, a left-wing think tank.

Mr Mishel said the premium paid by manufacturers had declined since the 1980s and 1990s. Mr Mishel attributed the decline to global competition, outsourcing, lower unionization rates and higher utilization. wide of subcontractors. Mr Mishel said that in many cases jobs in manufacturing still offer better health care and retirement benefits than some other industries.

But the share of American workers employed by manufacturers has fallen to less than 9% today, from more than 20% in the early 1980s. “There are just more opportunities to work elsewhere than there are. had in the past if you’re looking for paid employment, ”said Julie Davis, Workforce Development Manager for the Association of Equipment Manufacturers.

Rudy Perez, a former migrant worker who has worked at Gentex for 18 years, manages a new Spanish-speaking line for the company.

Gentex Automotive Supplier Corp.

GNTX 2.53%

, based near Grand Rapids, said the pool of available workers in the region was small even before the coronavirus pandemic reconnected the forces of supply and demand across the U.S. economy.

“Everyone is fighting for the same people,” said Daniel Quintanilla, director of talent acquisition for the company.

For many restaurants and grocery stores, the shortage of workers is the biggest drag on potential sales gains for customers wanting to return to meals and in-person shopping. Executives at these companies say the demand encourages them to raise wages. For manufacturers, however, labor shortages are compounded by tight supplies and high prices for materials ranging from steel to lumber to resin. These additional costs limit their ability to raise wages, executives said.

Daniel Quintanilla, Director of Talent Acquisition at Gentex, recruits from non-English speakers who work as laborers in landscaping and agriculture.

Because most factories have been fully operational since last summer, hotels and restaurants are hiring comparatively more now as customers return as Covid-19 restrictions are lifted. Paul Isely, a professor at Grand Valley State University in Allendale, Michigan, who studies the region’s economics, said manufacturers are under more pressure to maintain wages than some service employers because they compete with factories around the world rather than with restaurants around the corner. .

At Gentex, Mr. Quintanilla recently stepped up recruitment among non-English speakers working as laborers in landscaping and agriculture. In these jobs, workers generally earned less than the average Gentex employee – about $ 25,000 per year, compared to over $ 35,000 per year at the auto and benefits provider, said Mr. Quintanilla. Gentex has set up a Spanish speaking manufacturing line, where workers can speak their native language with their peers and managers. Gentex also plans to add ESL courses, Quintanilla said.

The lesson, Mr. Quintanilla said: “In this competitive job market, be above everyone else and do something that no one else is doing.”

Rudy Perez, a former migrant worker who runs Gentex’s Spanish-speaking line, said that after 18 years at Gentex, he jumped at the opportunity to work with new employees with similar backgrounds to his. He said salary and benefits were among the reasons he stayed with the company.

“They are not trying to make us work to death,” Perez said of his employer.

Automotive supplier Gentex Corp. said it was competing with other industries for a small pool of workers available in the Grand Rapids, Michigan area.

A tightening labor market

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Write to Austen Hufford at [email protected] and Nora Naughton at [email protected]

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