As manufacturing jobs decline, some workers struggle to climb into the middle class

EJ Jenkins poses for a portrait near one of many recently closed schools in Gary, Indiana. A longtime resident of the city and a steel worker at US Steel Gary Works, Jenkins has seen his community change.

For EJ Jenkins, steel has played a vital role in his life and his hometown.

"You had factory plants pretty much all throughout the city and that created a lot of employment,'' says Jenkins, 44, who has worked in a steel mill in Gary, Indiana, for nearly 22 years. "That's one way Gary back in those days was able to thrive. But a lot has happened since then. A lot of businesses closed. … A lot of our citizens have left for better opportunity.''

Though he doesn't have a college degree, working in the mill has allowed Jenkins, who is Black, to make a good living. He'd like to see factories return and give his neighbors the same chance.  

“Giving us economic opportunities ... raises the bar,'' he says, "And it elevates the whole city.’’

The U.S. has lost more than 5 million manufacturing jobs within the past 25 years, hindering the financial mobility of workers without a college degree and taking a particularly heavy toll on workers of color, according to a new report from the left-leaning Economic Policy Institute. At the same time, low-wage service jobs have soared.

"All workers, and especially Black and brown workers were hurt by the loss of more than 5 million manufacturing jobs in this period,'' says Robert Scott, senior economist at EPI and co-author of the report that evaluated data from the Bureau of Labor Statistics, U.S. Census Bureau and U.S. International Trade Commission.  

"Rebalancing trade and rebuilding infrastructure offers a historic opportunity to create millions of good jobs for Black, brown and other workers of color, and women, who were the victims of systemic racism and discrimination, and (had) lack of access to educational resources and opportunities for advancement,'' Scott says.

EJ Jenkins drives through his hometown of Gary, Indiana. “Gary has a lot of potential and space,” He said, “we just need someone to listen.”

Factories close, communities struggle

Black workers lost 646,500 jobs in the manufacturing sector between 1998 and 2020 – a 30.4% drop. White workers saw an even steeper decline, with their rate of employment in the manufacturing sector plunging 37.3%.

That drop was due in part to white workers becoming a smaller share of the overall labor force, slipping to 62% from roughly 74%, Scott says. Meanwhile, Black workers saw their number of factory jobs slide despite their share of the broader workforce rising to 12.3% in 2020 from 11.3% in 1998.

Hispanic and Asian American and Pacific Islander workers gained more manufacturing jobs between 1998 and 2020 as their shares of the broader workforce doubled, or more than doubled, during that time period, Scott says. 

Black, Latino and other workers of color have been especially hard hit by the shrinking number of manufacturing jobs because they are overrepresented among those who don't have a higher degree, and have historically had more difficulty getting better paid jobs in other industries because of discrimination, the EPI report says.  

BEST GROWTH IN DECADES:Economy grew 5.7% last year, its best showing since 1984, as activity revived amid pandemic

RISING RATES:Fed signals it will likely hike interest rate in March to curtail inflation

"These jobs are the best jobs in many places for working class families,'' Scott says. "So when these jobs go away ... tax revenues fall. The ability for government to provide police and fire department (protections) declines. There are layoffs in government. So cities are decimated. It's not just individual workers and families.''

The ability for consumers to get what they want at a reasonable price can be a positive aspect of trade, says Andrew Butters, assistant professor of business economics and public policy at the Indiana University Kelley School of Business.

But there are also "very significant consequences,'' says Butters who was not involved with the EPI study. "The livelihoods of some communities and households can really be hurt.''

Steam produced by the US Steel Gary Works plant stretches for miles along the Lake Michigan coast line. The Gary, Indiana, community has had to deal with job losses at the plants, which emit greenhouse gases that contribute to a warming climate.

Factory work gives an economic lift

As higher-paying factory jobs have disappeared, the number of lower-wage service jobs in industries ranging from retail to restaurants has soared, growing by nearly 30 million since 1998, according to the EPI report.   

Average hourly pay in manufacturing was $29.93,  in June, 2021, as compared to $28.14 in service industries according to EPI's analysis of current employment statistics and employment cost trends data from the Bureau of Labor Statistics. The service jobs also provided lower benefits. 

White workers without a college degree who are earning the median wage make 29% more per year in factory jobs than in other industries, while their Black counterparts see a pay boost of 17.9%, according to the EPI analysis.

Meanwhile, pay for Hispanic workers is 17.8% higher, while Asian American and Pacific Islander workers are paid 14.3% more than their peers in nonmanufacturing industries. 

But manufacturing jobs have continued to decline. 

Factory positions took a steep drop between 1998 and 2007, when China became part of the World Trade Organization and its exports to the U.S. accelerated, the EPI report says.

While the deficit with China is roughly $400 billion, the U.S. has a trade gap with several other countries including Korea, Mexico and Canada, and the total trade deficit in regards to goods is expected to exceed $1 trillion this year, Scott says.

"China is a big piece ... but it's by no means all of it,'' Scott said of the deficit that has resulted from the U.S. importing more than it exports to some trading partners. 

The trade deficit is one of several factors contributing to the manufacturing decline in the U.S., says Butters.

Some factory jobs have shifted overseas to countries where labor costs are lower, and the rise of automation has meant fewer workers are needed for certain tasks.

“Companies have really done quite a bit of innovation,'' he says. For instance, "the process with which it takes to build a car these days typically requires less employees, less human power.’’

EJ Jenkins works at US Steel Gary Works. The local community in Gary, Indiana has suffered from the loss of manufacturing jobs as factories have closed.

'A big change' to the steel mill 

Jenkins from Gary worked in a grocery store and a distribution center after high school before eventually getting a job working for U.S. Steel.

“Coming from a low paid job into the steel mill, that was a big change,'' he says, adding that the higher pay enabled him to pay for his wedding and to buy a home.

His job at the mill also provided him with a good pension and other benefits, which proved critical in 2002 when Jenkins said he suffered third degree burns in an apartment fire and needed skin grafts.

"That's expensive,'' he says, "But with my insurance, a lot of that was actually paid for.''

Though Jenkins attended college briefly, he believes that it's key workers have the ability to earn a good income even if they don't pursue higher education. 

"I'm not saying people shouldn’t go to college,'' Jenkins said. "I’m just saying that college isn’t for everyone.'' .

EJ Jenkins works at US Steel Gary Works. The local community in Gary, Indiana has suffered from the loss of manufacturing jobs as factories have closed.

Looking at the many deserted factories that dot the streets of his hometown, Jenkins believes a revitalized manufacturing base could help revive Gary and other largely Black communities that have seen manufacturing facilities close, jobs disappear and resources dwindle.

"We're looking for equal opportunity,'' Jenkins says, emphasizing the need for factory hires to reflect the city's population. "If you're looking at hiring that person, and I have the same qualifications, you should look at hiring me too.'' 

Infrastructure spending creates jobs

Investing in infrastructure and climate protections could create a large number of jobs in manufacturing as well as other sectors, says Scott, the senior economist at EPI.

"We could create millions of good jobs, roughly half of which would be in manufacturing,'' Scott says adding that historically disadvantaged communities could benefit if many of those new jobs are targeted to Black, Latino and female workers.

Narrowing the U.S.'s trade deficits also would offer more opportunities to the nation's labor force.

"The growth of imports and loss of exports is why we've lost these 70,000 factories,'' Scott says. "We could recover ... one to two million jobs at least simply by rebalancing trade.''

The clogged supply chains. which emerged during the pandemic making some goods harder to get or more expensive to buy, could lead to a ramping up of production in the U.S., says Butters, the professor. 

"We were seeing some increase in manufacturing jobs,'' he says. "Some of these firms and companies were moving plants back into the country and ... I wouldn't be surprised if, given everything we’ve gone through, we’d actually see an acceleration of that trend.'' 

There also are other businesses, in areas like transportation and warehousing, that have recently raised wages, Butters says, and they could help fill the void in communities that have seen a steep loss in factory jobs. Amazon, for instance, has opened some facilities in Indiana.

"The hope would be as economies and communities have to transition ... these other opportunities will offer very robust and high levels of earnings,'' Butters says.

You can follow Charisse Jones on Twitter @charissejones and sign up for our Daily Money newsletter here.