When you follow economics, business, and manufacturing, a continuing refrain is the skills gap. Factories badly need employees, but too few people have the education and skills to do the work.
“Employers aren’t just whining,” the Harvard Business Review said in 2014. The Manufacturing Institute noted in 2018 that the “workforce crisis could get worse.” Companies faced a “widening worker shortage” in the fall of 2019, according to IndustryWeek.
Basic economic theory would suggest that dire shortages would drive markets to address them. Not only would there be training and education aplenty, but companies would raise pay to attract people who would be willing to ready themselves.
And yet, those great blue-collar opportunities don’t seem to arise. Maybe because automation and outsourcing remain cheaper alternatives. Or, perhaps, because executives have become so used to lower pay that they cannot conceive of a different course.
Look at Tesla Motors. The company is understandably trying to expand its factory footprint. Sales growth has been hampered by the need to significantly scale up production.
Make enough cars available and—who knows?—perhaps Tesla could become a consistently profitable company, finally proving the fans right. The last two reported quarters both had positive net income
But there’s always the other gap, between wanting adequate workers and wanting to pay workers adequately.
The company has proposed building a new plant in Austin, Texas, to focus primarily on Tesla’s Cybertruck, as Teslarati reported. The city and environs are good places to find technically talented people. Travis County, home to Austin, had a discussion of the proposal listed on the agenda for a June 23 meeting
Look at that proposal, though, and you see that on one hand, the high-tech company expects to use 65% unskilled labor. On the other, employment is supposed to be 5,000 “middle-skill jobs” with an average annual salary of $47,147. Let’s break that into three observations:
- A reminder about averages: they easily overstate what many people will make.
- The proposal mentioned a $15 an hour “living wage” for construction and permanent labor force. At 40 hours a week, 52 weeks a year, that’s $31,200.
- The average annual salary is about what Refuse and Recyclable Material Collectors make, according to the Bureau of Labor Statistics, or BLS.
Yes, the average hourly wage for people in refuse and recyclable material collection is $19.90 an hour, not $15. The latter you might expect to pay a fast-food worker in a city.
The average annual wage in the field is $41,400, which isn’t far off from the $47,147 that wages for people at the top inflate.
The BLS numbers do encompass a range of jobs, like waste treatment and disposal, which pays better. Restrict the view to waste collection alone and the average hourly pay is $19.04, for an annual yield of $39,590.
That’s well over the $31,200 that the 65% of unskilled workers presumably making the touted “living wage” of $15 will get.
There are mentions of such benefits as a choice of medical and prescription plans as well as dental and vision, but nothing about the dent in someone’s salary a plan will make.
And, mind you, Texas is a leading state for Covid-19 growth. A factory by its nature could mean heightened infection potential. So, hazard pay? Apparently not.
If most of the jobs are unskilled, how are they also middle-skilled? More importantly, the broader manufacturing industry isn’t doing better overall.
Look at BLS average annual wages for an example of workers in higher tech manufacturing through the category called “Computer Numerically Controlled Tool Operators and Programmers.” Average annual wage: $45,560. For other types of manufacturing work, the number drops.
It’s impossible for companies to honestly say that they can’t find adequate help and that “markets” drive wages to their current points. Executives and shareholders are trying to buck markets because they don’t like the results of rising pay. Time to stop pretending that something else is the case.