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Chris Alig, with his wife, Heather, in Canton, Ill., needs
By Alejandra Cancino
CHICAGO--Jim Ellis had a job with benefits but gave it up for a shot at something with a bright future.
In this part of the country, that meant he wanted to work for Caterpillar Inc., the construction equipment powerhouse. Now Ellis is on the morning shift at the company's East Peoria, Ill., plant, installing fenders on tractors and working on hydraulic lines, a manufacturing job description that once promised an American middle-class lifestyle.
The reality for Ellis is nothing like that.
With the new job he started in January, Ellis' pay jumped by $5 to $15.57 per hour, but he has no medical benefits for himself or his 3-year-old daughter, custody of whom he shares with his ex-girlfriend. Between rent and child support, he acknowledges falling back on his parents for support.
Reflecting on his pay, Ellis recalled the years he worked as an assistant manager at a fast-food restaurant. "It was one of the easiest jobs I've had," he said. It was also the best-paying job he's had. He earned up to $34,000 a year--a little more than $16 an hour.
His move to Caterpillar hardly evokes the kind of jobs most people think about when they hear President Barack Obama or his challenger, Mitt Romney, talk about bringing back manufacturing. The days when workers earned enough money to buy a car, a boat or a second home while supporting their families no longer exist for a growing number of people employed in manufacturing.
Factory jobs can still be good, but in the past three decades, benefits have eroded and pay has stagnated for many, or even fallen. Some entry-level manufacturing jobs pay so little that workers depend on government aid to feed their families and pay for health care.
Robert Bruno, a professor of labor and employment relations at the University of Illinois-Chicago, said earnings of newer manufacturing jobs "are not poverty wages, but they are not middle class. If the jobs don't pay sufficiently better, sadly, it will turn the manufacturing sector into another low-wage market, and we already have many of those," he said.
With more than 12.5 million people in the U.S. unemployed, some politicians push manufacturing as an answer to the nation's economic woes, suggesting that bringing back factory jobs from overseas represents a return to greater prosperity. Gary Pisano, a professor of business administration at Harvard Business School and co-author of "Producing Prosperity: Why America Needs a Manufacturing Renaissance," is skeptical of that approach.
"The idea that we will employ a large share of workers in manufacturing again is not going to happen," Pisano said. He added that the days when manufacturing provided a good living for people with little more than a high school education are gone because the U.S. cannot compete with wages paid in developing countries.
Meanwhile, factory wages could fall even further, predicts Howard Wial, executive director of the Center for Urban Economic Development and a nonresident senior fellow at the Brookings Institution. Historically, Wial said, unionized workers have accepted concessions in bad economic times by counting on getting something back during good years. But that's no longer necessarily true.
A case in point is the recent agreement between Caterpillar, which is enjoying record profits, and machinists at a plant in Joliet, Ill.
In mid-August, after machinists had been striking for 3 months, the union approved a contract that calls for a one-time 3 percent wage increase for workers hired after May 2005 at a reduced hourly pay while freezing wages of those hired before that date who were on higher pay scales. The agreement, Wial said, may set the groundwork for companies to demand concessions from workers even while they are reaping robust profits.
Tiered pay scales like those at Caterpillar have not only become commonplace in the past two decades, but they also have prevented workers from significantly improving their hourly earnings; in many cases, pay has stagnated or been reduced. Under its 2011 contract with the United Auto Workers union, Ford Motor Co. can hire entry-level workers at $15.78 an hour, roughly half of what veteran union workers are paid. Their wages could reach up to $19.28 per hour over the four-year contract but will freeze there. As a result, Ford plans to add 12,000 hourly jobs at its U.S. plants by 2015, including some that will be in-sourced from Mexico, China and Japan.
Chris Alig considers himself a middle-class family man, complete with a white picket fence guarding his home. But to maintain his lifestyle, he needs at least 20 hours of overtime each week. The caveat, he said, is that overtime is not guaranteed.
When orders are rolling in, overtime can be abundant. But any slowdown in growing economies such as China or Brazil can trickle down to workers like Alig. Last month, workers learned that the company was cutting overtime and announced temporary layoffs that will occur next month.
"I had a misconception that if you worked at Caterpillar, you got it made. That quit being the case in the '90s," Alig said.