The bigger pay increases in certain industrial states
Manufacturing wages are rising at a rapid clip in some major industrial states as shortages of certain skills and gradually falling unemployment rates force more companies to pay up to attract and retain workers.
Although manufacturing wages on a nationwide basis are still rising slowly—and they lag behind the average increases for all private-sector workers—they are growing faster than overall wages in certain states. In Texas, wages for all types of production workers in factories grew an average of 6.3% from a year earlier, compared with nationwide overall private-sector wage growth of 2.3%, according to U.S. government data for the three months ended Aug. 31. Factory-wage growth was 4.4% in Washington State, 4% in Oregon and 3.1% in Indiana in that period.
The bigger pay increases in certain industrial states are likely to spread to other parts of the country, especially as baby boomers start to retire, some economists say. “There are skill shortages that are developing and are going to be more and more widespread,” said Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation, an industry-funded research group in Alexandria, Va.
The wage growth applies to a wide range of manufacturing jobs—from machine operators and repair people to electricians and engineers—and not just to specialties such as welding, where shortages are acute. It also comes in spite of two-tiered wage scales in some industries in which new hires start at much lower pay, a practice that has long restrained wage growth. In auto-dominant Michigan, where two-tier wage systems are common, wage growth for manufacturing workers was 2.5% in the three-month period, compared with the national average of 1.6% for manufacturing wages.