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Update on the Earnings of New Hires in Manufacturing

This report, which updates analyses we published in 2013 and 2014, finds that the manufacturing sector continues to offer a pay premium relative to other industries.  Although this pay premium fluctuates with the business cycle, it has persisted over time for both new hires and incumbent workers, providing evidence that the manufacturing sector continues to offer good jobs for workers.

Specific findings in this update include:

  • Using the most recent available data, we find that, in the first quarter of 2016, average monthly earnings were almost 21 percent higher in manufacturing than in other industries, and the average monthly earnings of newly hired workers were 35 percent higher in manufacturing.
  • The earnings premium for new hires tends to be counter-cyclical.  In the years prior to the recession, earnings of new hires in manufacturing were 32 percent higher on average than new hires' earnings in other industries. The premium increased during the last recession, peaking at over 44 percent in 2010, but declined during the recovery and has leveled out at roughly 35 percent in recent years.
  • When compared to workers with more tenure, new hires in manufacturing have fared relatively well.  As of the first quarter of 2016, the average earnings of new hires in manufacturing were about 66 percent of the average earnings of incumbents in manufacturing.  In contrast, for non-manufacturing, new hires earned about 58 percent of what incumbents earned.  This 8-point gap has persisted since 2012. 
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