Letters to the Rockford Region: October 2016

Mike Nicholas, President RAEDC - Letters to the Rockford Region October 2016Some people question why manufacturing is so important to our local economy. Roughly 20% of the Rockford Region’s workforce is employed in manufacturing versus an average of approximately 10% for the State of Illinois and 9% for the nation as a whole.

The manufacturing industry is the fourth largest employer in the nation, according to federal statistics. It provided an annual payroll across the U.S. of $639.9 billion (2014 figures). American manufacturers contribute nearly $6 of every $10 in U.S. exports or $847.8 billion.

According to the Economic Policy Institute (EPI), the manufacturing sector is also a particularly important provider of jobs for workers without a college degree. This can be seen in the manufacturing wage premium – the dollar amount by which the average manufacturing wage exceeds the wage of an otherwise comparable worker outside the manufacturing sector. The average wage premium for all U.S. manufacturing workers without a college degree was $1.78 per hour (or 10.9%) in 2012-2013.

The large footprint of the manufacturing sector according to EPI is also reflected in the high level of indirect employment supported by manufacturing production. The purchase of domestic goods and services by the manufacturing sector supports a large number of jobs outside manufacturing. As a result, manufacturing has a large “indirect employment multiplier.” For every person directly employed in manufacturing, manufacturing output supports more than 1.4 jobs elsewhere in the economy. In total, the manufacturing sector supports approximately 17.1 million indirect jobs in the United States, in addition to the 12.0 million persons directly employed in manufacturing, for a total of 29.1 million jobs directly or indirectly supported, more than one fifth (21.3 %) of total U.S. employment in 2013.

The manufacturing sector employs workers at all skill and education levels. According to EPI, scientists and engineers made up 7.8% of the manufacturing labor force in 2011, a share that is more than twice as large as the rest of the economy. And while many manufacturing jobs may not require a college education, they are not unskilled. Manufacturing employs many highly skilled
workers in high-productivity jobs and manufacturing wages are higher than average as a result.

So the next time someone asks why manufacturing is so important to our local and national economy, you can help them understand the significant impact of manufacturing on our economy.

Until next month,

Mike Nicholas Signature - Casual

Mike Nicholas, President
Rockford Area Economic Development Council