Tuesday, May 29, 2012

Take The Good With The Bad

The good news? Manufacturing jobs are returning to the United States.

The bad news? Many of these jobs aren't paying what they used to.

Flat U.S. Wages Help Fuel Rebound in Manufacturing:

The celebrated revival of U.S. manufacturing employment has been accompanied by a less-lauded fact: Wages for many manufacturing workers aren't keeping up with inflation.

The wage lag is a key factor contributing to the rebounding competitiveness of U.S. industry. A recent uptick in factory employment and the return of some production to U.S. shores from abroad both added jobs that probably otherwise wouldn't exist. But sluggish wages also are squeezing workers' incomes and spending. That, in turn, hurts retailers who target middle-income earners and restrains the vigor of the economic recovery.

"The U.S. has held manufacturing wages in check while there has been strong wage growth in China and moderate wage growth in Mexico," says economist Gordon Hanson of the University of California, San Diego, referring to two of the U.S.'s biggest lower-wage competitors.

This is a situation with few options to remedy. Lower labor costs are one of key reasons why companies are adding more jobs in the US and in some cases bringing jobs back that had been moved offshore. If those costs increase, that job growth would likely be stunted. Since lower paying jobs are better than no jobs, it's something that we're likely going to have to live with. The new normal if you will.