Lincoln (Neb.) - Nov. 21, 2000 - The manufacturing industry has the potential to bring to Nebraska or any other state a number of economic benefits, including an influx of export dollars and jobs that pay above livable wages.
"The manufacturing industry is a desirable target for economic development efforts, particularly in rural areas," said Lisa Darlington, assistant director of the Bureau of Business Research in the University of Nebraska-Lincoln College of Business Administration. But, after completing a study of wages paid in Nebraska's manufacturing sector, she concluded that the benefits, particularly in wages, don't always work out.
In "The Livable Wage Picture in Nebraska's Manufacturing Industry," in the November/December issue of Business in Nebraska, Darlington profiled employment and wage trends in Nebraska's manufacturing industry over a 25-year period (1972-97), with particular attention to the state's two largest manufacturing sectors, food processing and machinery. She also compared the state's average 1999 wages in those areas to the "livable wage" scale examined in an earlier Business in Nebraska study.
"The hourly wage in the food processing sector averaged $10.79," Darlington wrote. "This average rate indicates that roughly half of all production jobs in the sector paid below livable wages for three of the five family unit types. In meat products, which accounted for 72 percent of food processing employment and 24 percent of all manufacturing employment, roughly half of all production jobs paid below four of the five family unit types."
The grain and oil-seed milling subsectors paid an average wage of $22.05 per hour, above the livable wage for all five family unit types, but accounted for only 5 percent of food processing and 1 percent of manufacturing jobs in 1997.
In the machinery sector, the average 1999 wage was $15.11 per hour, below the livable wage only for the single-parent, two-children family unit type, with the agricultural implements subsector almost identical at $15.10.
"The results of this analysis suggest that the dominant sector in Nebraska's manufacturing industry, food processing, which clearly has close ties to agriculture, has fallen short in the area of livable wages," Darlington concluded. But she said there is a potential remedy.
She said Nebraska took a positive step forward on the issue with the passage of LB 936, the Rural Economic Opportunities Act. The act offers income tax credits to businesses, including manufacturers, that add employment and pay wages above county-specific annual levels established by the Nebraska Department of Revenue.
Darlington's study also reflects changes in Nebraska's manufacturing industry over the last quarter-century.
She found that total manufacturing employment in the state in 1997 was nearly 107,000, a 26 percent increase from 1972, with food processing accounting for nearly one-third of total industry employment in both 1972 and 1997.
Food processing employment increased 33 percent over the period, while employment in the meat products manufacturing subsector increased 84 percent, with the number of low-paying production jobs increasing nearly twice as fast as other employment such as administrative or managerial occupations. Machinery employment increased 36 percent over the period as the sector moved from third to become the state's second-largest manufacturing employer.
Darlington also found that the total number of manufacturing establishments increased 14 percent between 1972 and 1997 to nearly 2,000, but the number of food processing establishments decreased by nearly a third to 292. The biggest reason for the drop in food processing plants was the closing of 139 of the 161 grain milling plants that operated in 1972.
The number of meat-processing establishments decreased by just 7
percent to 98 and exhibited a trend toward concentration of employment in
larger establishments and fast growth in relatively low-paying jobs.
There was virtually no change in the number of machinery establishments
(an increase from 203 to 205), but the number employing 20 or more
workers increased by more than a third to 74.
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