For several months, the U.S. manufacturing employment scene has been marked by strong job creation and weak-at-best wage growth, and last Friday’s jobs report (for July) took both contrasting trends to new highs and lows.
The 37,000 net new manufacturing jobs created in July not only represented the sector’s best monthly performance since last December’s 39,000. They resulted in the best annual employment gains (327,000) since the 345,000 figure registered in April, 1995. By contrast, manufacturing’s payrolls improvement between the previous Julys was only 53,000.
And how was industry’s wages performance affected? On a monthly basis, pre-inflation average hourly manufacturing pay nosed up by a mere 0.04 percent – much more slowly than the overall private sector’s 0.26 percent. Just as bad, July’s annual current dollar manufacturing wage gain of 1.31 percent was its lowest since June, 2015’s 1.25 percent, and less than half the private sector’s 2.70 percent. And although the private sector’s yearly wage increase represented an acceleration over 2016-17’s 2.49 percent, manufacturing’s increase was a (major) deceleration from the previous year’s 2.38 percent.
Even more striking, however: Thanks to the recent divergence between manufacturing and overall private sector pay, the July jobs report confirmed that, for all workers, pre-inflation manufacturing hourly wages have now fallen below those of the private sector for the first time since these figures have been compiled by the Bureau of Labor Statistics (starting in March, 2006).
Specifically, the new data finalized (for now) the preliminary May findings that current dollar wages in the overall private sector had hit $26.94 per hour, while comparable pay in manufacturing had stayed stuck at a penny lower. This development reversed itself in June, as pre-inflation manufacturing wages climbed to $27 per hour and nosed ahead of the private sector level of $26.98. But the preliminary July statistics once again put the private sector as a whole in the lead, by $27.05 to $27.01.
The pay gap between the two has closed especially quickly during the current economic recovery. At its start, in mid-2009, pre-inflation manufacturing wages were 3.97 percent higher than their counterparts in the private sector.
Wage data for production and non-supervisory workers go back much further (to 1964 for the private sector and to 1939 for manufacturing), and show that, from January, 1964 through December, 1975, current-dollar pay in the private sector in general exceeded manufacturing wages. The latter caught up in January, 1976, though, grabbed the lead in March, and stayed ahead until July, 2006. But since that September, manufacturing wages have been overtaken by those in the private sector, and as of June, 2018, the latter were 5.64 percent higher – a much wider gap than that between manufacturing and private sector wages for their entire workforces.
If the overall private sector was widening the wage gap with manufacturing because of impressive absolute performance, manufacturing’s slippage into below-average ranks mightn’t be much of a concern. But of course private sector wage growth during this recovery has been historically slow, too. All of which puts President Trump’s favorite campaign slogan in a revealing light. If present trends continue much longer, he’ll be hard-pressed to make manufacturing wages mediocre again, let alone great.