ameri resources


Need an office in metro Detroit, Alabama or Toronto? Office suites, meeting rooms, virtual offices, network access




free downloads
USA: "10+2" Program Update - Importer Security Filing and Additional Carrier Requirements" Update

USA: "10+2" Program Update - Importer Security Filing and Additional Carrier Requirements" Update. 75-page presentation (updated February 12, 2009) by U.S. Customs and Border Protection.

proceed to download
eJournals





back to index backAMERItalk April,  2007


Manufacturing jobs are being undercounted

Government statistics tend to significantly undercount manufacturing activity. The undercounting occurs because manufacturing companies increasingly outsource service activities that they formerly performed "inhouse," such as accounting, payroll, design, R&D, and others.

These activities are increasingly attributed to service industry sectors in the national statistics rather than to manufacturing. For the Midwest, where manufacturing plays an important part in its economy, the undercounting can seriously mislead us as we try to understand the source of our livelihood.

But more than services are being outsourced. Susan Houseman of the Upjohn Institute and her co-authors, Matthew Dey and Anne Polivka of the Bureau of Labor Statistics, find that U.S. manufacturing companies have also increasingly outsourced their "blue-collar" and production roles.

They do this in an indirect way; they use temporary and leased workers (usually on-site) who are technically counted as employees of "employment services agencies." Because these workers remain technically employees of the employment services agencies, the statistical counts of the work force of the companies that use employment services appear light, and declines in employment may be illusory, merely reflecting this outsourcing.

The number and size of employment services workers in the U.S. economy has grown rapidly over the past 16 years, easily outstripping overall payroll employment growth by a factor of six.

And behind this growth, worker occupations in the employment services industry have been shifting toward industrial workers at the expense of office and administrative occupations. According to a survey by the American Staffing Association, 58 percent of customers engage temporary or contract workers to fill needs in industrial occupations.

In their research, Houseman and her co-authors draw on public databases to estimate the rapidly growing use of temporary and contract workers by manufacturing companies in the United States. They find that "the number of employment services workers assigned to manufacturing grew by about 1 million, from about 419,000 in 1989 to over 1.4 million in 2000."

How does this practice affect the size of the U.S. manufacturing workforce? Per the Houseman research, the outsized growth of temporary and contract workers by manufacturing companies implies that, rather than falling as reported, manufacturing employment actually grew by 1.4 percent in the U.S. between 1989 and 2000.

In researching why manufacturing firms use temporary workers, research by Yukako Ono and Daniel Sullivan finds that growing firms tend to take on temporary workers rather than permanent employees when they expect that their output may fall in the near future. By doing so, firms are spared the high costs of firing workers when they must curtail their production.

Because of such company behaviors, temporary or contract workers tend to be first hired and fired by companies during swings in national economic activity.

During the 2001 recession, for example, the Houseman research finds that job declines in the manufacturing sector tended to be sharper than reported. Similarly, post-2001, manufacturers were more likely to hire workers from employment services agencies than to hire permanent workers, thereby understating recovery in manufacturing.

The miscounting also wreaks havoc with official productivity statistics. Since many measures of productivity are constructed as "output per worker," an increasing tendency to undercount workers employed by manufacturers tends to overstate productivity growth in the manufacturing sector in comparison to many other industry sectors.

What are the regional differences in undercounting of manufacturing? We do not know this yet.

However, if Midwest manufacturing companies behave like their national counterparts with respect to outsourcing of staff, Houseman's findings for the nation imply that employment-services workers add 8.7 percent to direct-hire employment in Midwest manufacturing.

While we do not know that Midwest manufacturers outsource from employment service firms to the same extent as the nation, we do know that the employment services industry is very prominent in the Midwest. As measured by annual revenue, the nation's top employment services corporation, Manpower Inc., is headquartered in Milwaukee; the No. 2 corporation is Kelly Services near Detroit.

In examining hiring patterns from the employment services sector, Susan Houseman and her co-researchers are on to an important avenue in assisting the nation and the regions to understand the composition of their economies.

Source: Small Business Times - GAI


previous page

go top
search our site


Loading

AMERItalk

Other articles from the same issue (April,  2007).

Value-added taxes put U.S. manufacturers at disadvantage
play read on

Big beneficiaries of Korea Free Trade Agreement might just be Japanese makers in U.S.
play read on

Synergy or Misery?
play read on

New tax provisions expand availability of cross-border losses to substantially reduce global tax liabilities
play read on

NAM applauds new countervailing duties policy toward China
play read on

Immigration and the Looming U.S. Demographic Crisis
play read on

US Senate okays doubling H1B visas to 115,000
play read on

Six Secrets to a Better Corporate Video
play read on

Corporate Governance: greater U.S. shareholder power poses threat to CEO performance
play read on

Website of Lobby for Detroit Makers Alleges Yen Manipulation Subsidizes Japanese
play read on

U.S. CEO pay jumped nearly 9% in '06
play read on

Health care costs show little sign of decline
play read on

Low-wage workers more engaged with better benefits
play read on

Manufacturing jobs are being undercounted
play read on

Factory losses severe for U.S. workers – 3.2 million jobs gone since 2000
play read on

Manufacturing Critical For Global Success, Indiana Expert Says
play read on

Merging Manufacturing and Sourcing Strategies for Global Opportunity: The Global Factory
play read on

Motor vehicle suppliers account for 4.5 million jobs (in U.S.), according to study
play read on


Our Free eJournals
GlobalAutoExperts

To visit GlobalAutoExperts Directory, click here.


©2008 GlobalAutoIndustry.com | HCI Group, Ltd.
101 West Big Beaver Road, Suite 1400 | Troy, MI 48084 USA
USA Tel: +1.248.687.1060 | USA Fax: +1.248.927.0347
Fax UK: +44.(0)845.127.4765 | Fax Europe: +31.20.524.1659 | Fax Asia: +852.3015.8120