Average Weekly Hours, Manufacturing

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The following is excerpted from a monthly news release of the Bureau of Labor Statistics, a part of the US Department of Labor. Entitled “The Employment Situation Summary,” it provides key statistics from industry employment data. The excerpted material was released on March 9, 2007:

“Weekly Hours (Establishment Survey Data):

The average workweek for production and nonsupervisory workers on private nonfarm payrolls fell by 0.1 hour to 33.7 hours in February. Weekly hours for factory workers were unchanged at 40.8 hours, while factory overtime hours increased by 0.1 hour to 4.2 hours.

The index of aggregate weekly hours of production and nonsupervisory workers declined by 0.3 percent in February to 106.4 (2002=100). The manufacturing index decreased by 0.1 percent to 94.7.”

http://www.bls.gov/news.release/empsit.nr0.htm

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The following perspective is excerpted from The Beige Book, a publication of The Federal Reserve Board. This section describes current economic conditions in the manufacturing sector, which affects manufacturing hours worked. This edition of The Beige Book was released on March 7, 2007:

“Manufacturing activity was steady or expanding in most Districts. New York and Kansas City noted a recent rebound in activity; Cleveland, Minneapolis, and San Francisco also reported increases. On the other hand, Dallas, Richmond, and St. Louis reported slower growth or a decline in factory activity. Chicago described manufacturing as sluggish, though with some recent signs of firming. Producers of steel and machinery saw increased demand in many Districts, and San Francisco and Boston noted a rise in orders for commercial aircraft and aviation products. Food manufacturing also experienced strong growth in the San Francisco and Dallas Districts. Manufacturers in the New York District continued to express widespread optimism about the near-term outlook, and Kansas City, Philadelphia, and Cleveland reported increases in manufacturers’ capital spending plans.

“Most Districts reported that manufacturing activity related to residential real estate remained sluggish, especially for production of household appliances, furniture, and building materials. Atlanta, St. Louis, and Dallas reported a slowdown in manufacturing of auto-related products, while Cleveland said that although some auto-parts suppliers have seen a decrease in activity, auto production has increased. Chicago said that light vehicle sales were running below plan, but producers had not yet adjusted their assembly schedules.”

http://www.federalreserve.gov/FOMC/BeigeBook/2007/20070307/default.htm

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The following perspective is excerpted from a speech given by Federal Reserve Vice Chairman Roger W. Ferguson, Jr. at the 2005 Annual Convention of the Allied Social Science Associations in Philadelphia , PA on January 7, 2005. In it he discusses underlying trends in productivity and labor markets, which determine hiring and compensation. These factors, in turn, determine average weekly hours worked for employees:

 

"Within durable goods manufacturing, computers and electronics, primary and fabricated metals, and machinery rank particularly poorly according to our criteria of underperformance, and these industries have also been identified with restructuring in recent years. Corroborating this anecdotal evidence, the durable manufacturing, information, and professional and technical services industries are also among the top six contributors to the post-peak increase in the aggregate permanent layoff rate. These underperformers are also at the top of the list of industries that experienced significant rates of job destruction during the labor market downturn of 2001 and 2002. In fact, the four industries that, according to our two criteria, were the key underperformers in recent years more than accounted for the overall increase in the average pace of job destruction between 1998-2000 and 2001-02. Finally, the relationship between our measures of underperformance and industry productivity growth is also informative about the importance of restructuring. Typically, productivity falls with employment in recessions, as firms--hesitant to sever ties to workers who will be valuable to them when demand recovers--reduce employment less than output. However, if firms perceive changes in demand to be permanent, the reluctance to reduce employment in proportion to output should diminish. In fact, productivity growth from 2000 to 2002 in the four key underperforming industries was not lower, on average, than in industries not experiencing large reductions in labor demand, supporting the notion that firms in these industries believed demand changes to have been permanent. Moreover, labor market underperformance, in general, was associated with slightly greater productivity growth between 2000 and 2002; this association suggests that underperforming industries reacted to changes in labor demand by destroying their least productive jobs--which is also consistent with the restructuring hypothesis."

http://www.federalreserve.gov/boarddocs/speeches/2005/200501072/default.htm

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The following perspective is excerpted from a speech given by Federal Reserve Vice Chairman Roger W. Ferguson Jr. to the Association for Financial Professionals Global Corporate Treasurers Forum in San Francisco, CA on May 12, 2005. In it he looks at the globalization of labor markets as a significant factor in determining domestic manufacturing employment.

 

"Labor is an even more important factor of economic production than capital. In most advanced countries, the share of income earned by labor is about double the share earned by capital. I think it is fair to say that globalization has had much less influence on labor markets than on financial markets. Nevertheless, we see some evidence of the forces of globalization in labor markets.

"In just the past ten years, the share of the U.S. population born in a foreign country rose from less than 9 percent to almost 12 percent. Of the more than 34 million foreign-born individuals in the United States last year, more than half entered the country after 1990. This inflow of new workers has had a major effect on some categories of U.S. jobs. For example, a recent survey by the Pew Hispanic Center revealed that one out of every three U.S. jobs in the following categories are filled by foreign-born Hispanics: groundskeepers, housecleaners, bricklayers, painters, construction laborers, meatpackers, and butchers. Nearly half of all drywall installers and plasterers are foreign-born Hispanics." Globalization has also changed the very structure of production both within multinational firms and between firms. It has become quite common for high-value U.S. components to be shipped to foreign destinations for assembly into finished products, many of which are shipped back to the United States. This so-called round-tripping enables firms to take advantage of economies of scale at each stage of the production process as well as different wage and skill mixes in different locations. These changes in the production process are likely to be particularly pronounced within multinational firms. Indeed, recent research shows that multinationals have made a disproportionate contribution to the acceleration of U.S. productivity since the mid-1990s." So if globalization has helped to increase competition and variety while lowering costs, why do so many oppose it? One answer is that competition and progress invariably produce winners and losers. Even if all consumers gain, a few producers may gain a lot and few others may lose a lot. Another answer is that, for the advanced economies, opening up markets to products from low-wage countries may disproportionately benefit those with the highest incomes, while greater immigration may hold down blue-collar wages, thereby creating greater inequality of incomes. Economists who have studied rising income inequality in America generally conclude that, although international trade and migration have contributed slightly, the main factor by far has been progress in information technology, which has boosted the demand for educated workers relative to those with low skills."

http://www.federalreserve.gov/boarddocs/speeches/2005/20050512/default.htm

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