March 29, 2024

U.S. Manufacturing Gains Jobs as Wages Retreat

That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so.

The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff — with the additional concession that the newcomers will not catch up for the foreseeable future. Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.’s director of collective bargaining.

“Some companies want to keep work here, or bring it back from Asia,” Mr. Pavy said, “but in order to do that they have to be competitive in the final prices of their products, and one way to be competitive is to lower the compensation of their American workers.”

The shrunken pay scale for newcomers — $12 to $19 an hour versus $21 to $32 an hour for longtime workers — threatens to undo the middle-class status of even the best-paid blue-collar jobs still left in manufacturing. A similar contract limits the wages of new hires at a nearby Ford Motor Company stamping plant, but neither G.E.’s 2,000 hourly workers nor Ford’s 2,900, nor their unions nor the mayor, Greg Fischer, have objected.

Quite the contrary, all argue that job creation must take precedence over holding the line on wages, given that the unemployment rate in this Ohio River city is above 9 percent and several thousand people apply for every unfilled, $13-an-hour factory job. “The trade-off is absolutely worth it,” Mayor Fischer said, arguing that while the city is actively subsidizing G.E.’s expansion here, mainly through tax rebates, that is not enough. “You must have a globally competitive wage to create jobs,” the mayor insisted.

The generational setback implicit in a “globally competitive wage” is evident at G.E.’s Appliance Park, the complex of factories where G.E. makes refrigerators, washing machines, dishwashers and other household appliances. Six years into the adoption of lower wages for new hires, half of the hourly workers are paid at the reduced scale.

In an earlier era, that would have been a source of friction, perhaps protest. Now it isn’t, and in an interview William Masden, 62, earning $31.78 an hour after 42 years at Appliance Park, attempted an explanation. The younger workers still get annual raises, he noted, and by the time they top out, he and his peers — the oldest baby boomers — “won’t be here any longer to remind them of what they are missing.”

Linda Thomas, 37, one of the first to be hired in 2005 under the new arrangement, amends that explanation. Her hourly wage, $18.19, has almost topped out, although it is nearly $14 an hour less than Mr. Masden’s. But she keeps silent. Too many unemployed people, she explained, would clamor for her job and her wage if she were to protest. “You don’t want to rock the boat,” Ms. Thomas said. “You take a chance on losing everything you have if you do.”

Mr. Masden’s final years at G.E., doing safety checks, and Ms. Thomas’s willingness, however reluctant, to do equivalent work as a forklift driver at a much lower wage illustrate a big reason that General Electric decided to expand production here. A new hybrid electric water heater will be manufactured in Louisville in a factory now being renovated, rather than in China, where G.E. makes its current model. And some production of refrigerators is being repatriated, mainly from Mexico.

“We have gotten to a point where making things in America is as viable as making things anyplace in the world,” said James P. Campbell, president and chief executive of G.E.’s appliances and lighting division, citing the drop in labor costs as a crucial reason. “They are significantly less with the competitive wage,” he said, “and that is a big help.”

Article source: http://feeds.nytimes.com/click.phdo?i=48f9f84c393b98baffce0672d08e5491

Speak Your Mind