• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Subscribe
  • facebook
  • instagram
  • RSS
  • RSMUS.com

The Real Economy Blog

Search

  • Economics
  • Technology
  • Consumer
  • Industrials
  • Finance
  • Real Estate
  • Health Care
  • Life Sciences
Home > Industrials > Manufacturers face tight labor, rising wages in 2019

Manufacturers face tight labor, rising wages in 2019

Dec. 13, 2018 by Jason Alexander

  • email
  • Twitter
  • Facebook
  • Linkedin

graphic of industrial productsForecasts call for manufacturing growth to increase faster than the general economy in coming years, with production estimated to rise 2.8 percent from 2018 to 2021, according to the Manufacturers Alliance for Productivity and Innovation Foundation (MAPI). This sustained growth will continue to put strains on manufacturers as they compete for an ever-shrinking pool of talent. According to the Bureau of Labor Statistics, the United States has approximately 12.75 million manufacturing jobs and employs around 8.5 percent of the U.S. workforce. As of November, there were about 500,000 open U.S. manufacturing jobs, compared to roughly 465,000 unemployed persons, exemplifying an ongoing trend of more available jobs than people to fill them.

We continue to see a divergence in the unemployment rate of manufacturers in durable goods (2.5 percent) versus nondurable goods (4.3 percent). Durable goods accounts for more than 80 percent of the 296,000 jobs added in manufacturing year-to-date. Historically, this has been an indicator of more job availability in the future. Continued tightness in the labor market, due in large part to a significant shortage in skilled labor, has also led to increases in wage growth, with U.S. average hourly earnings reaching $27 in October. Production and nonsupervisory workers earned $21.68 an hour on average, at or near an all-time high.

We expect both the tight labor pool and rising wages to continue in 2019, boosting manufacturing overhead expense and squeezing profit margins. Every incremental cost increase can have a material impact on a manufacturer’s profitability, so we expect manufacturers to continue to evaluate the value of labor and to reposition their focus on creating the most positive output for each dollar spent. By deploying more robotic process automation, for instance, manufacturers can enhance processes to not only be more efficient, but to also to produce lower cost profiles and limit impacts of wage increases going forward.

  • email
  • Twitter
  • Facebook
  • Linkedin

Related posts

  • Hospital hallway
    Medicaid expansion to lift health care in 2019

    Four states—Idaho, Nebraska, Utah and Montana— included Medicaid expansion on their ballots in 2018’s midterm elections. Montana’s ballot item was a renewal of expansion, which failed; the three other states saw Medicaid expansion initiatives pass, and we expect…

  • Interest rates rising
    Rising interest rates seen causing asset managers to recalibrate

    Policymakers believe the economy is on a strong footing, but the pace of rate increases going forward remains uncertain, and the effects on asset management could be significant. The Federal Open Market Committee is set to meet on…

  • real estate graphic
    Demographics, policy to drive 2019 real estate investment

    Fundamentals in the real estate market continue to be strong; however, at this late stage in the business cycle, investors need to be cautious as they venture into the development of more third-tier markets. Changes in demographics will…

Filed Under: Industrials

About Jason Alexander

@jaalex53

Jason assists clients in the industrial products, consumer products and financial services industries and has more than 15 years of experience serving large multinational clients with particular emphasis on SEC clients, Fortune 500 and middle market companies. Jason has previously advised clients in the areas of accounting, risk management, mergers and acquisitions, process design and improvement, internal audit, regulatory compliance, internal and external financial reporting and information technology system implementation. Strong record of accomplishment of people, team and practice development across North America, Europe, Latin America, Africa and Asia.

Jason is also on the Board of Directors of the RSM US Foundation and a member of RSM’s cutting edge Industry Eminence Program, which positions participants to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves.

Primary Sidebar

Read RSM analysts’ industry coverage of coronavirus.

Categories

  • Economics
  • Technology
  • Consumer Products
  • Industrials
  • Financial Services
  • Real Estate
  • Health Care
  • Life Sciences

Recent Manufacturing articles

RSMUS.com links

The Real Economy

Middle Market Business Index

MMBI Special Reports

Footer

  • Facebook
  • Instagram
  • RSS

About The Real Economy Blog

The Real Economy Blog from RSM US LLP was developed to provide timely economic insights about the middle market economy. It is offered as a complement to RSM’s macroeconomic thought leadership, including The Real Economy monthly publication and the proprietary RSM US Middle Market Business Index (MMBI).

© 2021 RSMUS.com | Privacy Policy | Cookie Policy

The Real Economy Blog
  • Economics
  • Technology
  • Consumer
  • Industrials
  • Finance
  • Real Estate
  • Health Care
  • Life Sciences