The role of the manufacturing sector in the U.S. economy is more prominent than is suggested solely by its output or number of workers. It is a cornerstone of innovation in our economy: manufacturing firms fund most domestic corporate research and development (R&D), and the resulting innovations and productivity growth improve our standard of living. Manufacturing also drives U.S. exports and is crucial for a strong national defense.

The current economic recovery has witnessed a welcome return in manufacturing job growth. Since its January 2010 low to April 2012, manufacturing employment has expanded by 489,000 jobs or 4 percent¹2 Coupled with attrition in the coming years from Baby Boomer retirements, this bodes well for continued hiring opportunities in the manufacturing sector.³

The rebound in manufacturing is important, not only as a sign of renewed strength but also because manufacturing jobs are often cited as “good jobs:” they pay well, provide good benefits and manufacturing workers are less likely to quit than workers in other private sector industries.⁴ In fact, our analysis finds evidence in support of these claims.

Specifically, this report shows that:

• On average, hourly wages and salaries for manufacturing jobs were $29.75 an hour in 2010 compared to $27.47 an hour for non-manufacturing jobs. Total hourly compensation, which includes employer-provided benefits, was $38.27 for workers in manufacturing jobs and $32.84 for workers in non-manufacturing jobs, a 17 percent premium.
• After controlling for demographic, geographic and job characteristics, manufacturing jobs experienced a significant 7 percent manufacturing wage premium. In other words, all else being equal, workers in manufacturing tend to earn 7 percent more per hour than their counterparts in other private industries.
• Like manufacturing workers, science, technology, engineering and mathematics (STEM) workers are catalysts for innovation in the economy. Not surprisingly, there is considerable overlap between the STEM and manufacturing workforces, with nearly one-third of college-educated manufacturing workers holding a STEM job.
• The educational attainment of the manufacturing workforce is rising steadily. Today, more than half of manufacturing jobs are held by persons with at least some college education.
• Manufacturing workers are more likely than other workers to have significant, highly-valued employer-provided benefits, including medical insurance and retirement benefits. Taking these into account increases the manufacturing compensation premium to 15 percent.
• The size of the premium, including or excluding benefits, increases consistently with educational attainment of a worker. Furthermore, the compensation premium has risen over the past decade across all levels of educational attainment.

In sum, manufacturing jobs provide benefits to workers with higher overall compensation than other sectors, and to the economy through innovation that boosts our nation’s standard of living.

¹ Bureau of Labor Statistics, Current Employment Statistics. www.bls.gov/ces.

² Bureau of Labor Statistics, Job Openings and Labor Turnover Survey. www.bls.gov/jlt.

³ It is important to distinguish between job opportunities and net job growth. While the Bureau of Labor Statistics (BLS) recently projected essentially no net change in manufacturing employment between 2010 and 2020, millions of openings in the sector will arise in the coming years in order to replace workers who retire or otherwise leave manufacturing jobs. BLS projects such openings by occupational category, and it estimates that, for example, production occupations (which are predominately in the manufacturing industry) will increase by 356,800 between 2010 and 2020, companies will actually need to fill more than 2.2 million openings over the decade. In short, manufacturing firms will continue to be a good source of good job opportunities. One factor potentially limiting the growth in manufacturing jobs is a mismatch between the skills needed for the jobs and the skills held by those looking for jobs. See, for example, “An economy that works: Job creation and America’s future,” Manyika et al., McKinsey Global Institute (June 2011).

⁴ Bureau of Labor Statistics, “Job Openings and Labor Turnover—February 2012,” Table 3. www.bls.gov/news.release/pdf/jolts.pdf.