The Washington Post gives us an interesting but blurry snapshot of the economy, looking at how the news about manufacturing, which is one of the few sources of real growth, isn’t necessarily all that good. This is the dominant story on page one—welcome placement for such a piece—but it really could have used a few more days of reporting.
The Post reports that while the manufacturing industry is adding jobs for the first time in nearly fifteen years, they aren’t necessarily good jobs.
It goes on the ground in Rust Belt Ohio to look at one factory that’s moved its operations back home from China and is planning to hire 2,500 American workers over the next year and a half. The problem is that those jobs start at McDonald’s wages—$7.50 an hour, or about $15,000 a year. The poverty line is $22,000 for a family of four.
The problem with the story is it’s skimpy on supporting evidence, particularly data. The thesis is that these new manufacturing jobs pay much less than they used to. I don’t doubt that, but surely the Post could have found numbers to back that up. If it couldn’t, it should have explained that. All we get is anecdotal evidence from the small-appliance factory profiled here, plus the well known fact that new hires at the Big Three get half the wage that older workers do.
That’s too bad, because the paper finds a very good anecdote to explain what might be going on. Here it is on why the Ohio company is hiring:
He decided to move manufacturing back from China because it takes two months to get products to market from his factories there. That lag led to supply and inventory headaches for his weather-sensitive products, particularly his signature space heaters. Those problems became less tolerable as his costs for making products in China and shipping them home began to soar.
Once he began making some of the heaters in a temporary facility in North Canton last year, he noticed that they sold 30 percent better than identical ones made in China, simply because of labels identifying them as made in America, he said.
The clincher was when his company was able to re-engineer the space heater so it required fewer man-hours to build. Even with all of that, Suarez said, his production costs are higher here than they would be in China.
The new plant will occupy a building that once housed $20-an-hour Hoover vacuum jobs, which are now in Mexico not paying $20 an hour.
But the Post almost completely ignores big factors here, particularly the state of organized labor. Here’s all we get (besides a boilerplate quote from the AFL-CIO):
But, he added, the pay offered in his non-union shops will be commensurate with the skills workers bring to the assembly line. Anything more, he said, would make his products uncompetitive.
That doesn’t even let us know for sure that the shop the Post is discussing is non-union. What’s going on with these low wages? Isn’t the Rust Belt one of the last bastions of organized labor? Why aren’t these shops organized? What does this say about the power of the unions there? These are big misses.
And the paper skimps on other details here. We’re told what wages are, but we’re not told anything about the benefits workers get. Things like health care coverage are a critical part of overall compensation—some people will work a crappy job just to get it for their family. Not telling us about the benefits means you’re not giving us the whole picture.
This is less problematic, but I also don’t like how the paper quotes the think tanks without noting which way they lean:
“Everybody had written off the manufacturing sector and the Rust Belt, but now the manufacturing sector is the shining star of the U.S. recovery,” said Mark J. Perry, a professor at the University of Michigan at Flint and a visiting scholar at the American Enterprise Institute…
“What we are experiencing is first and foremost a recovery from the depths of a terrible recession,” said Robert E. Scott, a senior economist at the Economic Policy Institute. “We have a long way to go before we climb out of this hole.”
The AEI is right-wing while the EPI is left-wing. Those are just two more pieces of background information the paper should have given its readers.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.