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Home Publications Blogs Beat the Press Washington Post Reports on Incompetent Managers In Manufacturing Industry

Washington Post Reports on Incompetent Managers In Manufacturing Industry

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Monday, 20 February 2012 17:43

The Washington Post told readers that the manufacturing industry is suffering from incompetent managers and therefore is not hiring as many workers as it should. According to the Post, managers don't realize that it is necessary to raise wages to attract more workers and instead are whining that they can't get the workers they need to fill vacancies.

While the Post describes the situation as a being a "shortage," the data make it clear that the problem is simply incompetent managers. As managers should know, the way to get more workers is to offer higher wages, however this clearly is not happening in the manufacturing sector. The wages of production workers in durable goods sector has been trailing the rate of inflation for several years.

Change in Average Hourly Wage of Production Non-Supervisory Workers, Durable Goods Manufacturing

manufact-wagesSource: Bureau of Labor Statistics.

The article reports that a skilled operator-programmer in one of the manufacturing sectors profiled in the article earns just $18-$28 an hour ($36,000-$56,000 annually). By contrast, last week the Post reported that even family practitioners earned almost $210,000 a year, while the median annual earnings for doctors in other specializations could be more than twice as high. If the managers of manufacturing companies do not understand how markets work, as the Post claims, then it is likely to seriously damage the future prospects for manufacturing in the United States.

Comments (8)Add Comment
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written by Russ Abbott, February 20, 2012 7:19
You're right that higher wages would generate more job applications. And I like your snarky comments. But you don't mention the other problem that manufacturers face. They have to price their products competitively to sell them. If higher wages mean too high prices (and I'm not arguing that one way or the other), then manufacturers have a point when they complain that they can't find workers at the wages they are able to pay.
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written by JSeydl, February 20, 2012 8:56
Haha, I love this. Someone needs to call Stanford and Harvard Business School to let them know that their graduates don't understand the law of supply and demand.
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written by Andrew Clearfield, February 21, 2012 12:03
I'm disappointed in your response to this extraordinarily poor article.

1) First of all, the graph that accompanies the Post article shows that manufacturing job openings have DECLINED by almost 40% from 2007, suggesting not that there is a lack of employees with the requisite skills (like the article claims) but rather that there are just simply a lack of job openings - period. (Okay, I concede that openings have been on the rise for the last two years, but it is quite likely that this just reflects the friction in the economy: improving economy means more job openings; it takes time to fill these jobs because of normal friction issues, and in the mean time the economy keeps getting better and more openings add up - when this trend turns around in three years will the Post write an article titled: "manufacturing sector reverses skill decline?" doubtful.).

2) Second, the article mentions that there are currently 600,000 manufacturing jobs going unfilled because employers can't find qualified applicants, but the Post neglects to mention that this figure A) represents less than 5% of all manufacturing jobs in the country and more importantly B) the Post gives us no basis for comparison with prior years as to what this number means - and why does the Post give us no basis for comparison with prior years? Because Deloit (the company that does this survey every year along with the Manufacturing Institute) HAS NEVER ASKED THAT QUESTION BEFORE IN ALL OF ITS PAST SURVEYS.

In other words, the Post went out and quoted numbers out of context and then found a bunch of anecdotal quotes to support its preconceived story angle. For once, you let the Post off too easy.

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written by Bart, February 21, 2012 7:50

Andrew, I wonder if poorly researched articles like this one are the result of the downsizing of newsrooms and the hiring of less prepared and lower paid workers.
Supply and Demand
written by Ethan, February 21, 2012 10:28
My last job as a lawyer -- with 40 years experience -- paid $30/hr. No sick pay, no vacation pay, no insurance, no pension, no nothin'. It was temporary and boring (reviewing thousand of documents in a super large transaction), but I was glad to have it. When I retired at age 68, they filled the spot the next day at $25/hr.
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written by ellis, February 21, 2012 12:07
So, the pictures of thousands of people applying for a few jobs is just a mirage? If the problem of joblessness were truly one of lack of skill and education, then education funding would not be cut, and hundreds of thousands of educators would not be out on the streets, also.
The Oligopolization of American
written by FoonTheElder, February 21, 2012 5:03
Instead of insisting on an increase in anti-trust and anti-competitve laws and enforcement, American businesses whine that they can't find people to work for the pittance they want to pay.

Practically every area of American commerce is controlled by a small number of companies who manipulate the markets, employees and suppliers to their advantage. These companies are friendly competitors.

Just like Lucky Luciano said, why kill each other when theres plenty of money to split between the members of the club. Do you think Pepsi and Coke are really competitors when the own 80%+ of their market?
Intelligence and Management don't belong in the same sentence
written by Steve in Flyover, February 22, 2012 12:58
I just love how "supply and demand" works for everyone, except the highly skilled blue collar worker.

I work on corporate/business jets. We are barely into a recovery, and already the PTB in our business are starting to whine about a "lack of skilled mechanics". They never add the rest of the sentence, which is "who will work for $15-20 an hour....."

Case in point: The shop at the local airport is down to ONE mechanic. The others have left for greener pastures. The local bizjet owners bitch about "shop rates", but can't understand why there is nobody with experience around here who can fix their airplanes. (Note: the "shop rate" hasn't changed for 10 years)

Not everyone has the intelligence and skill set to be an A&P. This hasn't kept the managers in aviation from screwing their mechanics at every opportunity. The problem is, the same skill set is needed by other industries, where the pay is better, the hours are better, the working conditions are better, and you aren't working 56 hour weeks one month, then laid off at the drop of a hat.

Currently, the aircraft mechanic population is comprised of:

-A majority are 45-60 year olds, who are too old to embark on another career, as much as they would like to

-A small minority of 20-30 somethings, who are using the certificate as a "means to a end" to another career field

-An even smaller/miniscule number of 20-30 somethings, who still like airplanes and don't want to do anything else.

Just like many other things, a "shortage" can be fixed if enough money is thrown at the problem. The problem is, the rosy "business plans" of our current crop of so-called managers fall apart when they actually have to pay a "market rate" for labor. So they cry about "not being able to find skilled workers" and bull$hit the local politicians into supplying them with workers whose training has been paid for/subsidized by the government.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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