You are browsing the archive for Manufacturing.

Fact Checking PA Governor Corbett’s Jobs Record…and Some Unsolicited Advice

2:07 pm in Uncategorized by ThirdandState

By Stephen Herzenberg, Third and State

Governor Tom Corbett’s administration has a new summary of Pennsylvania’s recent job performance. Today’s news that Pennsylvania’s unemployment rate is as high as the national unemployment rate underscores, however, that the state’s recent jobs record is not  good. Let’s take a closer look.

PA vs. U.S.: The Corbett jobs summary notes that Pennsylvania’s unemployment rate is below the national rate — and it was when the summary was first released. This was not a new trend: the Pennsylvania rate was a point or a point-and-a-half below the national rate for most of the four years before Governor Corbett took office. A year ago, the gap between the Pennsylvania and U.S. unemployment rate was still statistically significant. (See Table A.) But the gap between the two rates — the “Pennsylvania advantage” — has been shrinking steadily since 2010 until the Pennsylvania rate finally climbed to the U.S. level in August 2012, both equaling 8.1%.

Private-sector Job Growth: While the administration touts private-sector job growth in 2011, the numbers reflect a national trend, rather than a unique Pennsylvania story.

The U.S. economy has had 30 consecutive months of private-sector job growth. In fact, Pennsylvania’s rank for the percent growth in private-sector job growth has fallen from 8th in 2010 to 36th in the 12 months ending in July 2012. One of the reasons that Pennsylvania’s private-sector job-growth ranking is down is the deeper cuts in public employment in Pennsylvania compared to other states. Deep cuts to Pennsylvania public schools and colleges led to a loss of 14,000 education jobs alone in 2011.

These layoffs impact the classroom and Main Street too. Unemployed teachers, like unemployed factory workers, don’t have money to spend, which affects the broader economy.

Manufacturing Job Growth: Manufacturing jobs growth improved in 2011, but again reflects national trends. In fact, Pennsylvania’s manufacturing job growth since early 2010 is slightly below half the national increase. (See The State of Working Pennsylvania 2012.)

New Hires in Marcellus Shale: Not this one again. The administration is touting natural gas industry growth by citing the number of new hires. As we’ve explained repeatedly, new hires are not new jobs (most new hires replace people who quit or are fired). In fact, the number of new hires is basically a meaningless number. Statewide there were 580,400 new hires during the 2nd quarter in Pennsylvania, while total non-farm employment rose between the 1st and 2nd quarter by less than 300 jobs. In other words, the only reason to cite new hires is to make the job gain seem substantially larger than it really is.

The gas industry has led to some job growth in Pennsylvania, just not on the scale claimed by the industry. Between the 4th quarter of 2008 and the 4th quarter of 2011, employment in the core Marcellus Shale industries grew by 18,000. That gain was largely wiped out by the loss of 14,000 education jobs in just one year. Even using the most generous estimates, employment in the Marcellus Shale in direct and ancillary industries in the 4th quarter of 2011 (as published by the Pennsylvania Department of Labor and industry) was 238,400 – about 4.2% of total state employment.

Here’s the unsolicited advice: Twenty months into Governor Corbett’s first term, there is still time for the Governor to pursue policies that will improve Pennsylvania’s job performance. There are multiple options that have strong bipartisan and business support. For example, investing in transportation infrastructure as recommended by the Governor’s own transportation commission.

In manufacturing and workforce development, the administration is also saying some of the right things. But talk is cheap: we need actual investment in skills and innovation if our job performance is going to improve relative to other states and the nation.

The Manufacturing Jobs Score by President Since 1948

1:02 pm in Uncategorized by ThirdandState

By Stephen Herzenberg, Third and State

After former President Bill Clinton claimed the “jobs score” was better in Democratic presidential administrations than in Republican ones, Colin Gordon of the University of Iowa and I did some research to see how presidential administrations scored on manufacturing job creation since Harry Truman. Our findings are published on AlterNet this morning.

We thought it was important to do this analysis because manufacturing jobs are typically family-supporting jobs — in other words, good jobs. Manufacturing also plays a critical role in the growth of overall living standards, a point on which there is bipartisan consensus.

What’s the punchline? Democratic administrations (seven since 1948) on average add around a million manufacturing jobs every four years. Republican administrations (nine since 1948) lose about a million manufacturing jobs every four years.

We think these findings will be especially salient in battleground states such as Pennsylvania where voters in manufacturing-intensive regions make up a large share of swing voters.

For more, read our full piece on AlterNet.

PA Must Reads: CEO Pay, Manufacturing Pay and Austerity Economics In Action

2:41 pm in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Tribune-Review reports this morning that the Pittsburgh-based retailer American Eagle Outfitters has hired a new CEO. So what is it like to be the CEO of the company most responsible for millions of tweens wearing sweat pants in locations other than the gym?

Well, for starters, you get a nice signing bonus and $15,000 for your lawyer to review your contract, a luxury car and a severance package equal to two years of your salary plus your stock options should things not work out.

The new CEO made $2.6 million a year at Levi Strauss, so he just got a 242% raise. As King Louis XVI of France was fond of saying, it’s good to be king.

American Eagle Outfitters Inc.’s new CEO Robert L. Hanson could make as much as $26.7 million over his first three years with the company, the South Side clothing retailer disclosed in a Securities and Exchange Commission filing.

Averaged over the three-year contract, the $8.9 million a year Hanson could make leading American Eagle would rank him near the top 10 CEOs in Pittsburgh for annual compensation in 2010.

If you are concerned about a lack of good jobs for the 99%, one positive development is that Governor Tom Corbett has formed an advisory council to be housed at the Team PA Foundation to focus on issues important to manufacturing. On average, manufacturing jobs pay better than jobs in the service sector (especially at the low end, see the chart) so it makes sense to do what can be done to expand manufacturing employment.

One member of the Governor’s new advisory council highlights the choice between “training our own” workers for good manufacturing jobs versus importing new talent. Given the combination of wage stagnation and high unemployment faced by Pennsylvania workers, we think the priority should be training our own.

One of the biggest issues for manufacturers is recruiting new talent, especially for the factory jobs and metallurgy engineering positions, said David Barensfeld, CEO of Ellwood Group Inc., an Ellwood City-based manufacturer that makes engineered heavy metal sections for specialty equipment manufacturers.

‘We need to train more of our own or allow more of the foreign students’ to remain in the United States, Barensfeld said.

Of course, employers get more tempted to press for importing talent when they perceive the skill levels of Pennsylvania’s young people as inadequate. Here, cuts in educational funding in concentrated-poverty communities make it more likely that employers long-term will give up on a large fraction of the American workforce. For example, the end of Recovery Act federal aid to state and local governments and state budget cuts for schools means the Scranton School District has lost $4.8 million in state and federal funding.

Anticipating an increase in expenditures, a decrease in revenue and bound by law to not increase taxes by more than 2.1 percent, the district must cut almost $3 million from its 2012 budget…

The budget also accounts for a $2.1 million loss in state funding and a $2.7 million loss in federal funding.