Rattner: Manufacturing wages today in America lower 'than average wages in the economy as a whole'

Former "car czar" Steven Rattner, who actually hates the nickname he earned overseeing the auto bailout, is pushing back against proclamations of a flourishing American manufacturing industry.

Again. Rattner wrote an eye-catching New York Times op-ed in January calling the industry’s post-recession jobs gains a trickle, arguing "we need to get real about the so-called renaissance" partly because wages for auto workers and manufacturers dropped far more than the average private-sector worker since the end of the recession in June 2009.

He revisited some of those points in a March 30, 2014, appearance on ABC’s This Week, which took a break from coverage of Russia and the missing Malaysian plane to examine the state of "Made in the USA."

"We certainly want these kinds of advanced manufacturing jobs. But remember this, manufacturing wages today in America on a per-hour basis are actually a bit lower than average wages in the economy as a whole," he said. "And what I mean by that is there are lots of really good high-paying jobs in sectors like education, like IT, like health care, service sectors that are not just entry-level jobs, they are really high-paying jobs, and this is our competitive advantage."

Manufacturing jobs are typically seen as a source of higher pay for people who don’t earn college degrees, and President Barack Obama put an emphasis on them in his State of the Union address. So PunditFact wondered if Rattner is right: Are per-hour wages in manufacturing a little smaller than average wages for the rest of the American economy?

Rattner pointed to U.S. Bureau of Labor Statistics data for average hourly earnings of production and nonsupervisory employees in the private sector, which make up about four-fifths of total private-sector employment.

The most recent data for February 2014 shows the average hourly private-sector wage was $20.50.

The manufacturing industry average was, as Rattner said, a bit lower at $19.43. Hourly wages are almost $3 higher for employees who produce durable goods, such as cars, phones and computers, than those who make nondurable goods, or things like food, gas and clothes.

Weekly wages tell a different story, with manufacturers earning almost $122 more a week than the total worker average in February. The reason for the discrepancy between hourly and weekly wages is simple: Manufacturers work more hours. "Anyone can work more hours and make more money," Rattner said.

But manufacturers also earn more money an hour when you factor in supervisors. BLS data for February show average hourly earnings are $24.31 for all private-sector employees and $24.72 for manufacturing employees -- the opposite of what Rattner said.

Which dataset is better? The question can incite an economists’ quarrel.

Dean Baker, a liberal economist and co-director of the Center for Economic Policy Research, took issue with isolating a dataset that excludes supervisors, saying analysts see the distinction as arbitrary and are increasingly using the whole workforce for their research. The manufacturing industry has a lower percentage of production employees (70.1 percent) than the average for the private-sector workforce (82.7 percent), which accounts for the higher pay when using Rattner's measure, Baker said.

Rattner argues viewing the data his way is more representative of the typical worker’s earnings without being influenced by the top of the pay scale.

Another liberal economist and former Obama administration adviser, Jared Bernstein of the Center for Budget Policies and Priorities, faulted Rattner for excluding benefits on top of wages. Manufacturing workers often have benefits, he said.

Another BLS source for wage data (yes, there are a lot of them) shows that when looking at total compensation (wages plus benefits), manufacturing workers earn $35.14 an hour, which is higher than the $28.44 average for careers in the service-providing industry and $29.63 for all private-sector workers in December 2013.

"Since it's widely believed that workers trade off benefit pay for lower wages, it's a mistake to just consider wages in this sort of comparison when you're dealing with an industry that pays benefits (as opposed to say, fast food)," Bernstein said.

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stated on November 10, 2024 in an interview on CNN's "State of the Union"

Inflation-adjusted weekly wages “are lower today than they were 50 years ago.”

Matthew Lavoie, National Association of Manufacturers spokesman, said 97 percent of the group’s 12,000 members provide health insurance.

Rattner conceded manufacturers earn more than service-industry workers when benefits are included in his New York Times column.

In our interview with Rattner, he anticipated these objections to his claim.

"But my point remains the same: The perception that manufacturing jobs are ‘better’ jobs is out of date," Rattner wrote. "Note also that over the past year, per-hour wages for all industries rose by 50 cents per hour but in manufacturing, they rose by only 21 cents per hour. The trend is not manufacturing's friend, as my NYT piece pointed out."

Our ruling

Rattner was careful on This Week to single out data for per-hour wages when he argued manufacturers are not paid as much as the rest of workforce.

His claim relies on the most recent data for production workers in the manufacturing industry, who earn about $1 less than the average of their private-sector counterparts. However, factoring in supervisors shows manufacturers make 41 cents more per hour. Adding benefits gives manufacturers more of an edge.

We won’t take sides and say what dataset we think is best. What we can say is that Rattner makes an accurate point by one measure.

On balance, we rate the claim Mostly True.