(What’s Left of) Our Economy: Real Wages Remain a Trump Economy Weakness

Tags

Barack Obama, blue-collar workers, Employment-Population ratio, inflation adjusted wages, Labor Force Participation Rate, manufacturing, non-supervisory workers, private sector, production workers, real wages, slack, Trump, wages, {What's Left of) Our Economy

As I’ve written repeatedly, I’m convinced that the economic data conclusively show that the U.S. economy on numerous fronts has kicked into a higher gear during the Trump years. But last week’s inflation-adjusted wage figures are an important reminder of one big exception: American workers’ price-adjusted take- home hourly pay.

Indeed, by every relevant measure, these real wages during Mr. Trump’s first 27 months as President have been rising at a pace slower than that during his predecessor Barack Obama’s final 27 months in office. Ditto for manufacturing workers, whose fortunes have been such a Trump focus.

And the comparison flatters Obama even when the data for blue-collar workers – generally the lowest paid members of the American workforce – are stripped out, although in absolute terms the Trump-era performance here has been somewhat better.

Here are the percentage changes through May. (In the lingo of the Bureau of Labor Statistics, which tracks these numbers, blue-collar workers are “production and non-supervisory workers.”  And as usual, public sector workers are excluded because their pay levels are overwhelmingly determined by politicians’ decisions, and thus say little about the fundamentals of the economy or the job market.)

                                     m/m        y/y   1^st 27 Trump months  last 27 Obama months

private sector:            +0.18     +1.30              +2.06                         +3.00

manufacturing:          +0.28     +0.46               -0.09                         +2.96

private production:    +0.32     +1.73              +2.29                         +3.27

mfg production:        +0.23     +1.03              +2.08                          +2.73

These results continue to be especially surprising given overall unemployment rates that have been at multi-decade lows – which should be forcing wages up, as employers find themselves forced to offer higher pay in order to compete for increasingly scarce workers. And although, as I’ve written, it’s possible that manufacturers in particular have held the line on wages because they’re not able to find workers with anything close to the skills they need, I wonder how understanding such workers will be about this explanation when it comes time to vote for President in 2020.

At the same time, here’s what’s not open to debate: Despite the plunge in the unemployment rate, other measures – notably the Employment-Population ratio and the Labor Force Participation Rate – show that there’s plenty of slack left in the U.S. labor market. If politicians and business leaders really want to see real wages rise healthily again, they’ll need to figure out how to lure able-bodied Americans still on the sidelines back to work.

(What’s Left of) Our Economy: Production Workers Have Been Manufacturing’s Biggest Jobs Losers

Tags

Great Recession, Jobs, Jobs Friday, Labor Department, manufacturing, middle skill, non-supervisory workers, production workers, recovery, {What's Left of) Our Economy

It’s Jobs Friday tomorrow – the day when the Labor Department reports on how much net new employment the U.S. economy either gained or lost during the previous month (in this case, June). It’s also the day when I report on job and wage gains or losses in the manufacturing sector. To shed some more light on the upcoming data, I decided to look more closely at what kinds of employment has risen and fallen in industry since the Great Recession struck more than nine years ago.

The big takeaways: First, non-supervisory and production manufacturing workers took a much bigger employment hit during the downturn than their supervisory counterparts, and than their “blue-collar” counterparts in the private sector as a whole. Second, this pattern has held during the current recovery. Here are the numbers:

When the Great Recession officially began, at the end of 2007, non-supervisory workers comprised 72.20 percent of the nation’s total manufacturing workforce of 13.746 million, and supervisors and managers made up the remaining 27.80 percent. By the time industry hit its employment bottom, in March, 2010, the supervisory share was up to 29.91 percent, and the production share had fallen to 70.09 percent.

That may not sound like a huge change, but it means that 19.12 percent of the sector’s non-supervisory jobs were lost during the recession – nearly twice as great a proportion as the 10.36 percent net reduction in manufacturing supervisors and managers.

This imbalance, moreover, has continued during the recovery. As of last month’s Labor Department data (for May, which is still preliminary), 62.12 percent of the net jobs lost in manufacturing management during the slump had been regained. The figure for non-supervisory workers is only 30.89 percent – less than half the amount.

Overall private sector trends have been much different. During the recession, the share of net private sector supervisory and non-supervisory jobs lost was very similar – 7.48 percent versus 7.58 percent. During the recovery, the gap has widened, but is still considerably smaller than that for manufacturing. Specifically, since the private sector’s February, 20101 employment bottom, supervisory employment is up 14.92 percent, and non-supervisory employment is up 13.31 percent.

The possible implications merit considerable attention. For example, do these data suggest that America’s manufacturers are relatively satisfied with the layers of management they’ve been carrying lately? Or do they signal that industry has been lagging in automating these positions? Are the numbers a sign that manufacturers believe that supervisory employees are more productive than the rest of their workers? If so, why has manufacturing’s productivity growth been lagging recently at least as much as the rest of the economy’s?

From another standpoint, these results might mean that middle-skill jobs haven’t been under outsized pressure in America lately, contrary to many claims, but that they are in manufacturing.

More research of course is needed on all these fronts. And I’ll be providing analysts, reporters, and RealityChek readers with updated figures tomorrow.