April 11, 2017 Payrolls Resilient but Wages Dreary

Alan Tonelson covers a wide range of domestic and international policy issues; here he puts his spin on the March manufacturing figures.

Here’s my analysis of the latest monthly (March) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

• The job growth slowdown that struck the entire U.S. economy in March undercut manufacturing’s performance, too. But the latest 11,000 sequential gain, coupled with February’s solid but downwardly revised 26,000 and positive revisions helped the sector emerge from its latest employment recession.
• American manufacturing payrolls are now 5,000 higher than in January, 2016.
• The new figures also pushed March’s year-on-year manufacturing jobs gains to 37,000 – the best such improvement since last February’s 69,000. Even better, the new March annual rise also beat that between the previous Marches (35,000).
• Although the February manufacturing jobs gain was revised down slightly from 28,000, January’s figure rise was upgraded from 11,000 to 12,000, and December’s increase is now judged to be 18,000, not 11,000.
• Manufacturing’s share of total non-farm employment came in at a meager 8.50 percent in March. But that level at least beat February’s 8.49 percent – which represented an all-time low.
• Manufacturing wages performed less impressively in March than manufacturing employment. On a monthly basis, the second straight 0.04 rise in pre-inflation hourly pay in the sector trailed the overall private sector rise (0.19 percent) for the third straight month.
• More troubling, manufacturing’s March year-on-year pre-inflation wage growth (2.53 percent) trailed the overall private sector result (2.67 percent) for the first time since last February (when annual current dollar manufacturing wages increased by 2.32 percent and overall private sector wages advanced by 2.38 percent.
• The new manufacturing increase did beat March 2015-16’s 2.47 percent.
• Yet thanks to manufacturing’s recent relative wage weakness, it’s an even greater recovery-era laggard measured by its rate of wage increases than in February. As of that month, current dollar private sector wages had risen by 23 percent faster than hourly manufacturing pay since the expansion’s June, 2009 onset.
• In March, the gap had grown to 24 percent. Manufacturing wages had risen by 14.55 percent during that period, whereas private sector wages in toto were up 18.07 percent.
• Moreover, the latest available (February) data show that manufacturing’s wage lag is even worse – and also widening – in inflation-adjusted terms.
• February real manufacturing wages dipped month-on-month by 0.09 percent, while after-inflation private sector pay rose by 0.09 percent.
• Including these results, after-inflation manufacturing wages have risen by only 0.56 percent during the near-decade-long recovery. Real overall private sector wages have advanced by 3.49 percent. These results brought the private sector manufacturing-pr
• Adjusting for inflation, manufacturing’s wage performance looks much worse. The latest figures only cover January, but they show that real hourly pay in the sector is up only 0.65 percent since the recovery began in mid-2009 – more than seven years ago.
• As a result, the March real wage growth gap between the two 6.32:1 – considerably higher than February’s 5.22:1.
• The recovery-era story of manufacturing as a major job-creation laggard remained intact in March, too.
• Since America’s current expansion began, industry’s payrolls are up by a mere 5.68 percent. Employment in the private sector as a whole has risen by 13.92 percent during this period.
• The same trends can be seen since the last recession began, at the end of 2007. From that employment peak to the early 2010 troughs, manufacturing lost 2.293 million jobs and private sector payrolls shrank by 8.801 million.
• Since then, manufacturing has regained only 40.87 percent of those lost jobs (a total of 939,000). the private sector as a whole, by has boosted employment by 16.283 million.
• This means that total private sector employment is now 6.47 percent higher than at the recession’s late-2007 onset, but manufacturing employment is still 9.85 percent lower.

ALAN TONELSON
Alan Tonelson is Founder of the blog RealityChek – www.alantonelson.wordpress.com – which covers a wide range of domestic and international policy issues along with political and social trends.

For 18 years before leaving to launch RealityChek, Tonelson followed the impact of globalization on the U.S. economy, domestic manufacturing, and U.S. national security for the U.S. Business and Industry Council. This national business organization represents nearly 2,000 domestic American companies, most of them small and medium-sized manufacturers.

Tonelson has been called by The New Republic “the most influential economist spreading the nationalist gospel.”

His book on globalization and the U.S. economy, The Race to the Bottom, was published by Westview Press in 2000 and issued in paperback in 2002. His articles and reviews have appeared in Foreign Affairs, The Atlantic, Harper’s, FOREIGN POLICY, The New Republic, The National Interest, The Harvard Business Review, and most major national dailies, including The New York Times, The Washington Post, The Wall Street Journal, and USAToday, as well as on major news websites like BloombergView, CNBC.com, Fortune.com, Marketwatch.com, and Lifezette.com. In addition, Tonelson has commented frequently on economic and national security issues on Bloomberg TV, CNBC, CNN, C-SPAN, Fox Business Network, Breitbart News Daily, and other broadcast and print news outlets.

Tonelson has testified before several Congressional committees, as well as the U.S. Trade Deficit Review Commission, the U.S.-China Economic and Security Review Commission, and the Maine Fair Trade Commission. He has also lectured at the National Defense University, the State Department’s Foreign Service Institute, the David Sarnoff Research Center; at the Philadelphia, Kansas City, Indianapolis, Hampton Roads (Va.), Cleveland, Honolulu, and Alaska World Affairs Councils; the Providence (R.I.), Boise (Idaho), Louisville (Ky.), and Birmingham (Ala.) Committees on Foreign Relations; the Pacific Council on International Policy and the Japan-America Society; and at numerous other government, academic, business, and labor fora in the United States, Europe, Japan, and China.

In 2015, he was elected a Director of the Henry George School of Social Science in New York City.

A former Fellow at the Economic Strategy Institute and Associate Editor of FOREIGN POLICY, Tonelson holds a B.A. with highest honors from Princeton University.

Subscribe to Industry Today