Manufacturing Wage Premiums Have Diverged between Production and Nonproduction Workers

Abstract: A manufacturing wage premium is the average percentage difference between the wage a worker earns in manufacturing and the wage similar workers earn in industries other than manufacturing. Using standard wage regressions, we find that, between 1979 and 2018, the manufacturing wage premium declined much more for production workers (such as machine operators) than for nonproduction workers (such as managers or administrative assistants). As a result, the production-workers’ wage premium was 4 percent during 2015 to 2018, while the nonproduction-workers’ wage premium was 14 percent. The decline in the production-workers’ wage premium is broad based, both demographically and geographically. We argue that this decline was most likely caused by the loss of manufacturing production jobs, which put downward pressure on wages for this work. The decline in manufacturing wage premiums has important implications for the difficulties associated with recruiting manufacturing workers and for public investment in training for manufacturing jobs.

Keywords: wages; manufacturing;

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Cleveland Fed Regional Policy Report

Publication Date: 2021-11-09

Issue: 20211109

Pages: 26