Manufacturing wages rise, but hours worked decline

Statistics released by the Arkansas Department of Workforce Services (DWS) show that while hourly manufacturing wages are rising, the number of hours worked is on the decline.

As a result, average weekly earnings in Arkansas are down 2.5%.

In June 2012 weekly earnings in the manufacturing sector stood at $650.87, but one year later that number slipped to $634.44. There is a great disparity between pay for workers who manufacture durable goods (goods that don’t wear out quickly like appliances and cars) versus non-durable goods (items that are immediately consumed such as food or paper products).

According to DWS, durable goods manufacturing wages in June 2013 averaged $693.36 a week, while non-durable goods averaged wages of $580.32 a week.

Hourly wages are rising, however, as overall manufacturing pay stood at $15.55 per hour in June 2013. One year ago, hourly wages were $15.46 for manufacturing workers.

Dr. Michael Pakko, economist with UALR’s Institute for Economic Advancement, says the difference between higher pay, but lower weekly earnings rests in the number of hours worked.

“Mathematically, it is as simple as you described: Average hourly earnings are up slightly (+0.6%), but average weekly hours declined by 3% (from 42.1 to 40.1). Consequently, average weekly earnings were down 2.5%,” Pakko said in an email.

Randy Zook, CEO of the Arkansas State Chamber of Commerce, said the numbers support what he’s hearing anecdotally. There is ample work for ample pay, but due to lack of a viable workforce for some manufacturers, hourly output is down.

“We see companies all across the state, in significant numbers, that are unable to find people willing to go work and able to go work – by that, I mean that they have the skills needed to do the job,” Zook said.

He also indicated that productivity improvements are traceable in the higher wage, but lower earnings numbers.

“Manufacturing businesses are always making investments to try to improve their productivity. It is a relentless, constant pressure to improve productivity and it plays out in manufacturing all the time,” he said. “Manufacturers are always looking for ‘faster, better, cheaper.’”

The manufacturing sector has seen productivity and workforce challenges squeeze its employment ranks during the past decade.

The U.S. Bureau of Labor Statistics estimated there were 154,300 manufacturing jobs in Arkansas during June 2013. Employment in the sector is down 24.6% compared to June 2003, and is down almost 38% compared to the sector high of 247,300 set in February 1995.

Pakko also notes that inflation is having a larger impact on take-home pay for many of these blue-collar manufacturing jobs, which could partially explain lackluster consumer spending.

“The increase in the average hourly wage was only 0.6%, while consumer prices rose 1.8%. So in real, inflation-adjusted terms, hourly wages declined by more than one percent,” he said.