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Workforce Woes: Where does midstate manufacturing stand?

Numbers are merely a rough snapshot of a dynamic situation

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Manufacturing in five midstate counties is not back to where it was when the Great Recession started more than five years ago.

No surprise there, perhaps.

But how bad the situation is depends on how you look at the statistics.

Here's what is clear: About one of every seven manufacturing positions held by workers around the end of 2007 was no longer occupied in the same period in 2012.

Further calculations about their shrinking ranks, their wages and the bite inflation has taken from the equation show the economic impact to the midstate.

That back-of-the-envelope estimate is about $14.6 million. These are lost wages manufacturing employees aren't spending in other sectors of the local economy.

York County

York County, somewhat surprisingly, leads the midstate in a good way with a 2.7 percent decline in the numbers of manufacturing establishments within its borders from the last quarter of 2007 to the final period of 2012. The five-county average is 6.1 percent.

With varying degrees of saber-rattling from the likes of Milwaukee-based Harley-Davidson Inc. and Johnson Controls Inc. about moving and the more recent report of Honeywell International Inc. pulling production related to oil and gas drilling, of all things, out of York, you might think it'd be worse.

Michael Smeltzer, executive director of the York-based Manufacturers' Association of South Central Pennsylvania, said he was not surprised that the number of establishments hasn't declined more than it has in York County. But meanwhile, the percentage decline of manufacturing employees is just under 16 percent for York County.

"You have direct and indirect impacts," Smeltzer said. "When you look at the makeup of a community, that's the story."

Cumberland County

By most measures, the hardest hit county in the midstate is actually Cumberland.

Average weekly manufacturing wages have grown the least in terms of real dollars, its percentage employment decline led the midstate with 19 percent, and it lost the second-largest percentage of establishments during the period.

Jonathan Bowser, director of economic development for the Cumberland Area Economic Development Corp., wasn't surprised by the numbers. Big manufacturing names such as Tyco Electronics, now TE Connectivity, and Carlisle Tire & Wheel decided to move out in recent years.

But Bowser points to the county's relatively lower unemployment rate to show that the county has grown in other areas, from health care and technology to warehousing.

"I think we have done a good job at replacing those jobs with other jobs," Bowser said.

Lancaster County

Lancaster County, with its large population, has decreased its number of establishments and workers by the most of all five counties, although it fares better in percentage comparisons.

Lebanon County

The only place in the midstate where the percentage decline in the average number of manufacturing workers is less than the decline in establishments is Lebanon County.

Dauphin County

Average weekly wages throughout the midstate also have roughly held their own, for the most part, for people working in manufacturing, according to figures at the start and finish of the analysis period.

For Smeltzer, the phenomenon might be driven by employers not wanting their best people to leave amid a perception of a skills gap in the wider market pool.

Some wages, particularly in Dauphin County, are stronger than elsewhere.

Overall, there is an element of uncertainty at work. Manufacturers are busy today, but they don't see backlog, and so they aren't hiring, Smeltzer said.

Net effect

Across the midstate, about 1 in 7 manufacturing jobs have disappeared between the last quarter of 2007 and the end of 2012.

For those who've kept jobs, wages have roughly kept up. But with fewer workers getting checks, a back-of-the-envelope calculation puts the midstate about $14.6 million short per week on potential spending from manufacturing worker wages.

The first chart (see Midstate Manufacturing Employment below) shows the net percentage decreases of manufacturing employment in the midstate's five counties. The second chart (see Into the Economy below) shows the overall economic impact of manufacturing workers' spending in the midstate. Some data has been adjusted for inflation* using the federal Bureau of Labor Statistics' inflation calculator.

In many parts of the midstate, such small differences in values mean that buying power realistically might have declined to some degree. Regardless, the lower number of people employed in the industry means fewer paychecks overall.

*Inflation adjustment based on BLS inflation calculator comparing one year to another instead of more refined timeframes within those years, and it is not locally specific. Inflation adjustments should not be taken as exact figures. The calculator takes an average of each month's Consumer Price Index for U.S. urban areas to determine an annual CPI that is used to calculate year-to-year changes, according to the BLS website.

In terms of wages, manufacturing's effect remains stymied

These next charts (see Manufacturing Establishment Count and Wages Per Worker below) show the net percentage increases or decreases in manufacturing establishments and wages for the quarter the Great Recession began compared with the same quarter in 2012.

The analysis also adjusts some data for inflation* using the publicly available federal Bureau of Labor Statistics inflation calculator to get a rough sense of whether wages are keeping up with the cost of living. The wages chart shows in short that, yes, your wage is keeping up with inflation if you are still employed in manufacturing.

*Inflation adjustment based on BLS inflation calculator comparing one year to another instead of more refined timeframes within those years, and it is not locally specific. Inflation adjustments should not be taken as exact figures. The calculator takes an average of each month's Consumer Price Index for U.S. urban areas to determine an annual CPI that is used to calculate year-to-year changes, according to the BLS website.

SOURCE: Pennsylvania Department of Labor and Industry From Quarterly Census of Employment and Wages and Business Journal analysis

Midstate manufacturing, late 2007 through 2012

The Great Recession began in the last quarter of 2007, officially continued into 2009 and left a legacy with which the manufacturing and other industries are still dealing.

The last charts (see Average Number of Manufacturing Establishments, Employees and Average Weekly Manufacturing Wage below) show the course of the number of establishments and employees in the manufacturing sector in five midstate counties from the quarter the recession began through the last quarter of 2012, as well as the average weekly wage earned by manufacturing employees during those quarters, according to the state Department of Labor and Industry. The numbers are calculated as averages for each quarter.

In general, the number of establishments on a percentage basis has fallen significantly less for the five counties as a whole (about 6.1 percent) than the number of manufacturing employees (about 15.9 percent). In addition, the average weekly wage has roughly kept up with or exceeded the inflation rate.* These comparisons are based on the numbers in the last quarter of 2007 compared with the last quarter of 2012,** creating a snapshot of net gains or losses for the period.

* The inflation figures were determined with the federal Bureau of Labor Statistics' inflation calculator, which took the value of money for 2007 and converted it into an equivalent of 2012 dollars instead of providing a potentially more refined quarter-over-quarter comparison. Results may vary from actuals accordingly.

** All figures from the fourth quarter of 2012 from the department are preliminary.

 

SOURCE: Pennsylvania Department of Labor and Industry From Quarterly Census of Employment and Wages

Brent Burkey

Brent Burkey

Brent Burkey covers York County, agribusiness, energy and environment, and workforce issues. Have a tip or question for him? Email him at brentb@cpbj.com. Follow him on Twitter, @brentburkey.

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