Producing Poverty: The Public Cost of Low-Wage Production Jobs in Manufacturing
Much attention has been given in recent years to low-wage work in the fast-food industry, big-box retail, and other service sector industries in the U.S. The rise of low-wage business models in the service sector has often been contrasted to business models of the past, when blue collar jobs in the manufacturing industry supported a large middle class in the United States.
Recent research by the National Employment Law Project (NELP), however, found that manufacturing production wages now rank in the bottom half of all jobs in the United States. In decades past, production workers employed in manufacturing earned wages significantly higher than the U.S. average, but by 2013 the typical manufacturing production worker made 7.7 percent below the median wage for all occupations. During the same time period productivity in the U.S. manufacturing sector increased at a rate one-third higher than in the private, non-farm economy overall. The median wage for production workers in the manufacturing industry in 2013 was $15.66, with 25 percent of these workers earning $11.91 or less. The NELP researchers also found that, since 1989, there has been a significant increase in hiring of frontline production workers through temporary staffing agencies, where the wages are often lower and the work more precarious.
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. Recent research by David Autor and colleagues has documented the impact of increased exposure to trade from low-wage countries on wages and use of safety net programs. In this research brief we estimate the public cost of low wages in frontline production jobs in the manufacturing industry by detailing state and federal expenditures on safety net programs for workers in this industry and their families. This brief is the latest in a series that explores the pressures placed on safety net programs by low-wage industries.
For this analysis we focus on jobs held by frontline manufacturing production workers, defined as non-supervisorial production workers who work at least 10 hours per week for at least 27 weeks per year either directly in the manufacturing industry, or in production occupations highly associated with manufacturing in staffing agencies. We analyze utilization rates and costs in the five largest means-tested public benefit programs for which data is available: Medicaid, Children’s Health Insurance Program (CHIP), the Federal Earned Income Tax Credit (EITC), food stamps (the Supplemental Nutrition Assistance Program, or SNAP), and basic household income assistance (Temporary Assistance for Needy Families, or TANF).
- Overall, we find that between 2009 and 2013 the federal government and the states spent $10.2 billion per year on public safety net programs for workers (and their families) who hold frontline manufacturing production jobs. This includes workers directly hired by manufacturers and those hired through staffing agencies.
- A third (34 percent) of the families of frontline manufacturing production workers are enrolled in one or more public safety net program. For those workers employed through staffing agencies, the percentage of families utilizing safety net programs is 50 percent—similar to the rate for fast-food workers and their families.
- The high utilization of public safety net programs by frontline manufacturing production workers is primarily a result of low wages, rather than inadequate work hours. The families of 32 percent of all manufacturing production workers and 46 percent of those employed through staffing agencies who worked at least 35 hours a week and 45 weeks during the year were enrolled in one or more public safety net program.
- Eight of the ten states with the highest participation rates in public programs that support frontline production workers’ families are in the American south; the other two states are New York and California.
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