For EJ Jenkins, steel has played a vital role in his life and his hometown.
“You had factory plants pretty much all throughout the city and that created a lot of employment,” says Jenkins, 44, who has worked in a steel mill in Gary, Indiana, for nearly 22 years. “That’s one way Gary back in those days was able to thrive. But a lot has happened since then. A lot of businesses closed. … A lot of our citizens have left for better opportunity.”
Though he doesn’t have a college degree, working in the mill has allowed Jenkins, who is Black, to make a good living. He’d like to see factories return and give his neighbors the same chance.
“Giving us economic opportunities … raises the bar,” he says, “And it elevates the whole city.’’
Manufacturing jobs and what happens to them is of huge importance in Wisconsin and the upper Midwest. Wisconsin and Indiana are the top two states in the nation in terms of the number of workers employed in manufacturing.
The U.S. has lost more than 5 million manufacturing jobs within the past 25 years, hindering the financial mobility of workers without a college degree and taking a particularly heavy toll on workers of color, according to a new report from the left-leaning Economic Policy Institute. At the same time, low-wage service jobs have soared.
“All workers, and especially Black and brown workers were hurt by the loss of more than 5 million manufacturing jobs in this period,” says Robert Scott, senior economist at EPI and co-author of the report, which evaluated data from the Bureau of Labor Statistics, U.S. Census Bureau and U.S. International Trade Commission.
“Rebalancing trade and rebuilding infrastructure offers a historic opportunity to create millions of good jobs for Black, brown and other workers of color, and women, who were the victims of systemic racism and discrimination, and (had) lack of access to educational resources and opportunities for advancement,” Scott says.
Factories close, communities struggle
Black workers lost 646,500 jobs in the manufacturing sector between 1998 and 2020 – a 30.4% drop. White workers saw an even steeper decline, with their rate of employment in the manufacturing sector plunging 37.3%.
That drop was due in part to white workers becoming a smaller share of the overall labor force, slipping to 62% from roughly 74%, Scott says. Meanwhile Black workers saw their number of factory jobs slide despite their share of the broader workforce rising to 12.3% in 2020 from 11.3% in 1998.
Hispanic and Asian American and Pacific Islander workers gained more manufacturing jobs between 1998 and 2020 as their shares of the broader workforce doubled, or more than doubled, during that time period, Scott says.
Black, Latino and other workers of color have been especially hard hit by the shrinking number of manufacturing jobs because they are overrepresented among those who don’t have a higher degree, and have historically had more difficulty getting better paid jobs in other industries because of discrimination, the EPI report says.
But the shrinking number of manufacturing jobs negatively impacts workers of all backgrounds who now have less access to positions that tend to pay higher wages and don’t require a college degree, says EPI.
“These jobs are the best jobs in many places for working class families,” Scott says. “So when these jobs go away … tax revenues fall. The ability for government to provide police and fire department (protections) declines. There are layoffs in government. So cities are decimated. It’s not just individual workers and families.”
The ability for consumers to get what they want at a reasonable price can be a positive aspect of trade, says Andrew Butters, assistant professor of business economics and public policy at the Indiana University Kelley School of Business.
But there are also “very significant consequences,” says Butters who was not involved with the EPI study. “The livelihoods of some communities and households can really be hurt.”
Factory work gives an economic lift
As higher-paying factory jobs have disappeared, the number of lower-wage service jobs in industries ranging from retail to restaurants has soared, growing by nearly 30 million since 1998, according to the EPI report.
Average hourly pay in manufacturing was $29.93 in June, compared with $28.14 in service industries, according to EPI’s analysis of current employment statistics and employment cost trends data from the Bureau of Labor Statistics. The service jobs also provided lower benefits.
That may not seem like much, but taken across 40 hours a week, and 52 weeks a year, it amounts to more than $3,700 annually. With overtime, which is common in these low-unemployment times, the annual figure would likely be much higher.
White workers without a college degree who are earning the median wage make 29% more per year in factory jobs than in other industries, while their Black counterparts see a pay boost of 17.9%, according to the EPI analysis.
Meanwhile, pay for Hispanic workers is 17.8% higher, while Asian American and Pacific Islander workers are paid 14.3% more than their peers in nonmanufacturing industries.
Manufacturing jobs have continued to decline.
Factory positions took a steep drop between 1998 and 2007, when China became part of the World Trade Organization and its exports to the U.S. accelerated, the EPI report says.
While the deficit with China is roughly $400 billion, the U.S. has a trade gap with several other countries including Korea, Mexico and Canada, and the total trade deficit in regards to goods is expected to exceed $1 trillion this year, Scott says.
“China is a big piece … but it’s by no means all of it,” Scott said of the deficit that has resulted from the U.S. importing more than it exports to some trading partners.
The trade deficit is one of several factors contributing to the manufacturing decline in the U.S., says Butters.
Some factory jobs have shifted overseas to countries where labor costs are lower. Also, the rise of automation has meant fewer workers are needed for certain tasks.
“Companies have really done quite a bit of innovation,” he says. For instance, “the process with which it takes to build a car these days typically requires less employees, less human power.’’
‘A big change’ to the steel mill
Jenkins, from Gary, worked in a grocery store and a distribution center after high school before eventually getting a job working for U.S. Steel.
“Coming from a low paid job into the steel mill, that was a big change,” he says, adding that the higher pay enabled him to pay for his wedding and to buy a home.
His job at the mill also provided him with a good pension and other benefits, which proved critical in 2002 when Jenkins said he suffered third degree burns in an apartment fire and needed skin grafts.
“That’s expensive,” he says, “But with my insurance, a lot of that was actually paid for.”
Though Jenkins attended college briefly, he believes that it’s key workers have the ability to earn a good income even if they don’t pursue higher education.
“I’m not saying people shouldn’t go to college,” Jenkins said. “I’m just saying that college isn’t for everyone.”
Looking at the many deserted factories that dot the streets of his hometown, Jenkins believes a revitalized manufacturing base could help revive Gary and other largely Black communities that have seen manufacturing facilities close, jobs disappear and resources dwindle.
Pandemic supply chain mess could drive jobs back to U.S.
Narrowing the U.S.’s trade deficits would offer more opportunities to the nation’s labor force.
“The growth of imports and loss of exports is why we’ve lost these 70,000 factories,” Scott says. “We could recover … 1 to 2 million jobs at least simply by rebalancing trade.”
The clogged supply chains. which emerged during the pandemic making some goods harder to get or more expensive to buy, could lead to a ramping up of production in the U.S., says Butters, the professor.
“We were seeing some increase in manufacturing jobs,” he says. “Some of these firms and companies were moving plants back into the country and … I wouldn’t be surprised if, given everything we’ve gone through, we’d actually see an acceleration of that trend.”
Joe Taschler of the Journal Sentinel staff contributed to this report.
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This article originally appeared on USA TODAY: Lost factory jobs make it harder to move into middle class, report says