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Factory wages falling to the point that they can’t support middle-class life

For nearly 20 years, Darrell Eberhardt worked in an Ohio factory putting together wheelchairs, earning $18.50 an hour, enough to gain a toehold in the middle class and feel respected at work.

He is still working with his hands, assembling seats for Chevrolet Cruze cars at the Camaco auto parts factory in Lorain, Ohio, but now he makes $10.50 an hour and is barely hanging on.

“I’d like to earn more,” said Eberhardt, 49, who went back to school a few years ago to earn an associate degree. “But the chances of finding something like I used to have are slim to none.”

Even as the White House and leaders on Capitol Hill and in Fortune 500 boardrooms all agree that expanding the country’s manufacturing base is a key to prosperity, evidence is growing that the pay of many blue-collar jobs is shrinking to the point where they can no longer support a middle-class life.

A new study by the National Employment Law Project, or NELP, reveals that many factory jobs nowadays pay far less than what workers in almost identical positions earned in the past.

Perhaps even more significant, while the typical production job in the manufacturing sector paid more than the private-sector average in the 1980s, 1990s and early 2000s, that relationship flipped in 2007, and line work in factories now pays less than the typical private-sector job. That gap has been widening – in 2013, production jobs paid an average of $19.29 an hour, compared with $20.13 for all private-sector positions.

Pressured by temporary hiring practices and a sharp decrease in salaries in the auto parts sector, real wages for manufacturing workers fell by 4.4 percent from 2003 to 2013, NELP researchers found, nearly three times the decline for workers as a whole.

Despite that widening gap, Washington still paints the manufacturing sector as a gateway to the middle class. The White House designated $100 million in grants last month to encourage manufacturing innovation, part of President Obama’s goal of adding 1 million manufacturing jobs by the end of his second term. After losing more than 6 million factory jobs from 2000 to 2010, the sector has rebounded in recent years, with more than 700,000 positions created since early 2010. A total of 12.2 million Americans work in manufacturing, according to the Bureau of Labor Statistics.

“While they are rebounding in numbers, which is good news, they are not delivering on the wages front,” said Catherine K. Ruckelshaus, general counsel and program director at NELP.

She argued that if federal, state and local governments continued to promote manufacturing jobs with tax breaks and credits, employers should be encouraged to pay higher starting salaries and provide good benefits. “If you are getting a tax break or a subsidy, we should make sure those jobs are good jobs,” Ruckelshaus said.

Based in New York, NELP is a research and advocacy group for low-wage and unemployed workers. It receives some financial support from organized labor, including unions like the United Steelworkers and the United Food and Commercial Workers, as well as the AFL-CIO. The data in the study were drawn mostly from government sources such as the Bureau of Labor Statistics and the Census Bureau, and independent experts confirm many of the trends NELP cites in the report.

“We are not going to back to Detroit in the 1950s or Akron in the 1900s,” said Lawrence F. Katz, a professor of economics at Harvard University. “There still are many manufacturing jobs that are high-paying, but they tend to be more senior or require a lot more education than entry-level jobs do. And their numbers are shrinking, too.”

Even if it does not continue to be a mass employer or a ticket to the middle class, Katz said, manufacturing remains vital to the economy because it spurs innovation and leads to higher-paying, value-added jobs such as design, marketing and other support services. It is also a major source of productivity gains, as well as a generator of profits and exports for American companies.