Study: One in three U.S. manufacturing workers get public assistance, cost taxpayers $153 billion annually

Just over a third of non-supervisory manufacturing production workers in the U.S. and half of the nation’s manufacturing workers hired through temporary agencies rely on at least one public assistance program to support themselves or their families.

At a time when federal and state lawmakers are using multimillion dollar tax breaks and incentives to lure manufacturing jobs, the University of California, Berkeley’s Center for Labor Research and Education report calculates that low wages in manufacturing cost U.S. taxpayers approximately $10.2 billion a year in public assistance.

The center report focuses on the rapid growth in the use of low-paying temporary positions, which account for 9% of all frontline jobs in manufacturing, a nine-fold increase from 25 years ago, when less than one percent of production workers were employed by staffing agencies.

PRODUCTION JOBS MORE LIKE ‘WALMART JOBS’
The researchers note that the largest classification of temporary manufacturing production workers – assemblers and fabricators – earn a median wage of $10.88 an hour, compared to $15.03 for those hired directly by the manufacturers. Half of all manufacturing production workers hired through temporary staffing agencies are enrolled in at least one public assistance program – a rate just below the 52% of fast-food workers who rely on public assistance.

“Manufacturing has long been thought of as providing high-paying, middle-class work, but the reality is the production jobs are increasingly coming to resemble fast-food or Walmart jobs, especially for those workers employed through temporary staffing agencies,” said Ken Jacobs, chair of the Labor Center and co-author of the report. “While employment in manufacturing has started to grow again following the Great Recession, the new jobs created are less likely to be union and more likely to pay low wages.”

The Berkeley Labor Center report analyzed utilization rates and costs in the five largest means-tested public benefit programs for which data is available: Medicaid, the 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, the report found that between 2009 and 2011 the federal government spent $127.8 billion per year on these four programs for working families and the states collectively spent $25 billion per year on Medicaid/CHIP and TANF for working families for a total of $152.8 billion per year. In all, more than half – 56% – of combined state and federal spending on public assistance goes to working families.

ARKANSAS PUBLIC AID TAB AT $1.4 BILLION
In Arkansas, the report shows that 334,000 working families are enrolled in Medicaid and CHIP assistance programs. About 223,000 also receive EITC assistance and another 96,000 employed Arkansans received food stamps.

Arkansas’ annual tab for those programs amount to more than $2.45 billion in federal dollars, with $1.42 billion or 58% going to assist working families. On the state level, Arkansas taxpayers contribute about $255 million for public assistance programs, with working families receiving $149 million or about 59% of that total.

According to the Arkansas April job report when the unemployment rate fell to its lowest level ever at 4%, the number of manufacturing workers dropped to 152,700. That is a 1.4% decline from a year ago and puts Arkansas’ shrinking manufacturing sector on a path to fall below 150,000 workers, a level not seen since former President Bill Clinton was governor of the state.

Additional key findings in the report include:
• Eight of the 10 states with the highest participation rates in public assistance programs that support frontline production workers’ families are in the American South; the other two states are New York and California. Mississippi has the highest participation rate, at 59%.

• This high use of public safety net programs by frontline manufacturing production workers is due to low wages, not limited work hours. The families of 32% of all manufacturing production workers, and 46% 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.

• The growing reliance on public assistance among frontline production workers follows years of wage cuts across the manufacturing industry, said Jacobs. He noted that recent National Employment Law Project research found that for the first time in decades, manufacturing wages now rank in the bottom half of all jobs in the country, with the typical manufacturing production worker in 2013 making 7.7% below the median wage for all occupations.