“Made in America!” Those three words evoke a range of thoughts and emotions, from simple patriotism to a belief in a higher-quality product. They’ve also become a bit of a political rallying cry. Since the beginning of 2025, American manufacturing has been in the national spotlight more than ever, largely due to the Trump administration’s focus on using tariffs as its trade policy of choice.
As we pointed out in a recent article, manufacturing in America is a bit of a paradox. Experts agree that tariffs are highly unlikely to drastically increase manufacturing in the U.S. And that’s not necessarily a bad thing, since there are already over a half-million open manufacturing jobs today.
Why are there so many open manufacturing jobs? The answer lies somewhere between the opinions of Americans who overwhelmingly believe more manufacturing jobs would be great, while also not wanting to work one of those manufacturing jobs personally.
“Bringing manufacturing jobs back to America” has been a common political call to action over the past couple of decades. But does that make any sense with more than a half million positions open already? Moreover, why are politicians so quick to point to manufacturing jobs as a bellwether of economic progress? Are manufacturing jobs really that special? As it turns out, they are. Let’s examine why.
The Manufacturing Premium
In a recent NPR article by Greg Rosalsky, the author asks this question: “what makes manufacturing special enough to warrant all this ruckus in the first place?” Is it “nostalgia or political pandering?” Or is there a rational, logical reason to think focusing on manufacturing jobs “will best serve workers and the economy?”
According to Gordon Hanson, “an economist at Harvard Kennedy School who has published influential research on American manufacturing,” manufacturing is indeed special “because as long as we’ve been able to measure earnings in the sector, it’s just paid workers more, especially workers without a college education.”
There’s even a term for this fact, coined by economists: “the manufacturing premium.” Although some argue that the manufacturing premium has decreased over the course of the last few decades, many economists, including Hanson, believe that “the most convincing evidence on this subject shows that the manufacturing premium is still alive and well.”
To get to the bottom of the reasons behind the manufacturing premium, Hanson relied on a recent “study from economists David Card, Jesse Rothstein and Moises Yi.” Their research compared “the pay bump the average person would get from quitting a job in [the food service sector] and getting one in another industry, without going back to school or dramatically changing the skills or capabilities they already have.”
The results quantified the manufacturing premium: “The economists calculate that, on average, if a worker jumps from working in restaurants to working in manufacturing, they get a 35% pay bump. That’s a substantial premium, higher than if they went into retail (an 11% premium), education (a 13% premium), agriculture (a 16% premium), health care (a 19% premium), transportation and warehousing (a 24% premium), construction (a 25% premium), finance and insurance (a 32% premium) and professional, scientific and technical services (a 33% premium).”
That’s an impressive premium, although it should be noted that “the manufacturing premium is lower than that of some other sectors, including ‘information,’ which includes the movie, publishing, broadcasting and telecommunications industries (a 39% premium); utilities (a 49% premium); and mining, quarrying, oil and gas (a 62% premium).”
Because manufacturing encompasses so many different types of products, Card, Rothstein and Yi also calculated the manufacturing premium for a variety of subsectors:
“They find that in the low end of the manufacturing spectrum are industries that make apparel and leather (a 15% premium), furniture (a 19% premium) and textile mill and wood products (a 22% premium)…In the middle are manufacturing subsectors like plastics and rubber (a 30% premium) and food products (a 32% premium)…And at the high end are industries that manufacture computers and electronics (a 42% premium), transportation equipment, so like cars, ships and planes (a 43% premium), chemicals (a 47% premium) and — the highest of all — petroleum and coal (a 62% premium).”
According to Rosalsky, this data clearly shows “that high-end manufacturing offers workers a significant pay bump relative to other industries. Low-end manufacturing, of things like apparel and furniture, not so much.”
The Why Behind the Manufacturing Premium
With proof that the manufacturing premium is alive and well and, at least for high-end manufacturing, quite significant, Rosalsky moves on to ask the obvious question: why? Rosalsky notes that “Card, Rothstein and Yi don’t provide definitive answers for why manufacturing pays a premium. There are many plausible explanations.”
Unions
The first possible reason mentioned by Rosalsky is the fact that “manufacturing has a history of being a more unionized sector, which led to higher pay and benefits. A core idea here is unions force business owners and managers to share more of their profits with workers.”
However, the author points out that “it’s also true that the unionization rate in manufacturing has fallen pretty precipitously in the United States and that many manufacturing plants are not unionized…In fact, in 2023, only about 7.9% of manufacturing workers were unionized, which is not crazy different from the overall union membership rate in the private sector, which stood at about 5.9%.”
Greater Risk, Greater Reward
Moving on, Rosalsky discusses a potential explanation, which “economists call…a ‘compensating differential.’” The gist of this hypothetical is that “[w]orking in factories may be more dangerous than working in a lot of service jobs, and so manufacturers may have to pay a premium to attract workers willing to take on greater risk.”
Again, while this sounds reasonable, “the data doesn’t seem to really support this hypothesis in manufacturing. According to data from the Bureau of Labor Statistics, in 2023 the fatal injury rate in manufacturing was 2.5 per 100,000 workers. That’s slightly higher than industries like restaurants (1.6), retail trade (2.1) and leisure and hospitality (2.3) but well under construction (9.6), transportation and warehousing (12.9) and agriculture, forestry, fishing and hunting (20.3).”
Job Dissatisfaction
Yet another potential explanation for the manufacturing premium is that “many believe factory work is unpleasant” and therefore workers must be compensated more. Rosalsky cites actual manufacturing workers who have “talked about how uncomfortable factory jobs can be — including details like factory floors can get really hot when you’re wearing protective gear and standing amid a bunch of machines humming and whirring — how shift schedules can be long and inflexible and how the jobs can be mentally or physically taxing.”
This theory may hold more water than the others, as “[t]he Pew Research Center recently did a survey that suggested that manufacturing workers are among a more general group of ‘blue-collar’ workers who are more dissatisfied with their jobs than the rest of the workforce.” Likewise, “[a] 2024 Gallup survey found that only 23% of manufacturing workers felt engaged or enthusiastic about their jobs.”
Rosalsky notes that “[d]islike of factory work might help explain why, despite manufacturing paying a premium, many workers aren’t filling these jobs — which may actually increase the size of the premium that manufacturers have to pay to find people to do them.”
Expensive Machinery
A final factor that may play a role in the manufacturing premium, according to Rosalsky, is that “[m]anufacturing workers handle a lot of expensive machinery.” While this might not seem self-evident at first, economists strongly believe that “employers may have to pay more to attract people whom they can trust will be careful with their expensive machinery and not screw up productivity on the assembly line.”
Of course, the skills required to operate those expensive machines also plays a role. Rosalsky points out that “[t]here’s a lot of learning on the job to figure out how to work with this expensive machinery…workers with machine-related skills are very needed in the industry. Teaching these skills takes time and money. So maybe employers pay extra to convince workers to not quit and to lower their turnover rates.”
Good Jobs
It’s likely that all the factors discussed above play a role in keeping the manufacturing premium alive and well today. That’s why Rosalsky concludes that “[m]anufacturing punches above its weight when it comes to providing good jobs.”
What is a “good job,” you ask? Rosalsky discusses a study by Hanson, “together with UC Berkeley economist Enrico Moretti,” in which “they use a measure of industry pay premiums, similar to Card, Rothstein and Yi, to see which industries have provided good jobs to Americans over the last five decades.”
Hanson and Moretti “define good jobs as those that pay high premiums (in the top third), meaning there’s something about these industries that gives workers a big extra pay bump regardless of their background.”
Historically, “back in 1980, manufacturing accounted for almost 40% of all good jobs in America. That was for both college- and non-college-educated workers. It’s a pretty stunning statistic.” However, economists have found “that manufacturing’s portion of the nation’s good jobs has fallen dramatically over the past few decades.”
Yet, despite this recent decline, manufacturing jobs are still good jobs. As Rosalsky notes, “[t]oday, manufacturing accounts for only about 10% of the American workforce. Yet, with this measure, it accounts for about 20% of all good jobs in America.” In a nutshell, this is why so many still consider manufacturing jobs to be special.
Skills Pay the Bills
While manufacturing offers good opportunities for those without a college degree, the best manufacturing jobs can be found in the advanced manufacturing sector, whose jobs often do require education or skill development that goes beyond what’s typically available in high school.
Rosalsky notes that “many manufacturing jobs these days also require a bachelor’s degree, and even ones that don’t often require an associate degree, a certificate, an apprenticeship or critical vocational skills.” That’s part of the reason why there are so many open manufacturing jobs currently.
The supply of skilled workers simply hasn’t kept pace with the demand for such workers throughout the manufacturing sector. This phenomenon is commonly known as the “skills gap” and it’s been an ongoing issue for manufacturers for more than a decade now.
How do we bridge the skills gap? That’s a question that manufacturers have been trying to answer for quite a while, and it’s clear that widespread tariffs are not the answer. Instead, Hanson “thinks it’s much more important for America to invest in workforce development programs, like reforming high school education to offer kids more routes to get vocational skills, and investing in community college programs and apprenticeships to equip Americans with the skills needed to be productive in manufacturing.”
Don’t Reinvent the Wheel
Creating more good jobs in manufacturing won’t solve any of our economic problems if we don’t equip students and workers with the skills they’ll need to thrive in those jobs. Unfortunately, many manufacturers and educators aren’t sure where to start. Tackling the challenges of training students and workers for modern manufacturing careers can seem daunting. Fortunately, there are experts available to guide them through the process.
Manufacturers and educators would do well to form partnerships, so that manufacturers can help educators understand exactly which advanced automation skills are critical for local industries. Likewise, educators can provide insight into how manufacturers can best upskill current employees.
Both manufacturers and educators can benefit from the expertise of the technical training experts at Amatrol. Amatrol has been the world leader in technical education for more than four decades now. The experts at Amatrol can provide needed guidance on everything from training and hands-on skill development to industry-standard certifications and apprenticeships.
The experts at Amatrol have been working alongside manufacturers for years to design training programs featuring eLearning curriculum and hands-on experience with trainers equipped with industrial components workers will encounter on the job. For more information about how Amatrol can help train students or workers, contact an expert at Amatrol today!
