By the numbers: A dive into food, beverage manufacturing wages
With nearly 1.5 million food manufacturing workers (not including beverage), wages for this industry affect a large number of American families and companies big and small.
Here’s a breakdown of manufacturing wages for food and beverage:
Manufacturing classifications for wage data
Food manufacturing is a subsector of the manufacturing sector and is lumped into descriptions of manufacturing overall in economic analyses rather than the food sector, which often includes foodservice and restaurant workers.
According to the Bureau of Labor Statistics, under the North American Industry Classification System, the food manufacturing subsector is labeled NAICS 311. Beverage manufacturing gets its own classification as an industry group (NAICS 3121), though it’s put together with tobacco manufacturing as the subsector NAICS 312.
The food manufacturing subsector is further divided into several industry groups, such as grain and oilseed milling (NAICS 3112), sugar and confectionery product manufacturing (NAICS 3113), dairy product manufacturing (NAICS 3115), and animal slaughtering and processing (NAICS 3116).
By the numbers
The good news for food manufacturing workers is wages are currently on the rise, according to the Bureau of Labor Statistics.
While food manufacturing wages saw a few dips over the past decade, for the most part those wages have trended upward.
Not only did wages in this industry weather the Great Recession, but food manufacturing wages actually shot up from mid- to late-2008. From December 2007 to June 2009, when the Great Recession was in effect, hourly wages for this industry increased by just over $1 an hour, from $16.05 to $17.10.
Based on preliminary results, average hourly wages for food manufacturing workers in general rose $0.75 year over year from $18.43 in September 2014 to $19.18 in September 2015.
Jobs in the food manufacturing industry vary, as do the wages that come with each position. They don’t differ by a significant amount except when comparing supervisors to production workers, wherein supervisors generally make over $10 per hour more than the employees they supervise, and more than twice the amount that bakers and beverage laborers and freight, stock, and material movers make on average.
Trends affecting food manufacturing wages
Wage fluctuations in food and beverage manufacturing rely on various factors and industry trends.
While the average hourly wage for a food manufacturing worker was preliminarily $19.18 as of September 2015, average hourly earnings for manufacturing workers in general was $25.41 at that time. Despite being on the rise, wages for food manufacturing workers actually come in at the lower end of the manufacturing wages spectrum.
Joel Naroff, president of Naroff Economic Advisors and economic advisor to TDn2K, says that it could be a matter of value added from the labor side in terms of manufacturing a particular product.
With fewer technical skills needed on average for food manufacturing as compared to a sector like transportation equipment manufacturing, which had average hourly earnings of $30.11 in September 2015 based on preliminary results, the value added to the end product by the labor may be less, which equates to a lower wage.
When comparing a car to a food product, the price difference per item is obviously enormous. As a result, car manufacturers may have more leeway with raising wages for workers than food manufacturers.
"Labor costs become a more significant element of a lower-cost product, so [food manufacturers would] try to keep [labor costs] down as much as possible," said Naroff.
As pricing fluctuates for food and beverage products, this could create more opportunity for higher wages in the industry.
More consumers eating at home
One positive trend for wages is that more consumers are eating and cooking at home, particularly the group that self-identifies as foodies. These numbers are rising especially since the recession ended, when much of consumers’ discretionary spending was reduced as incomes declined.
"Now that those incomes are starting to grow, we’re seeing more spending occur, and a lot of the food processing part of the food sector has its sales in the U.S. economy," said Naroff. "Those that are selling heavily into the U.S. economy are seeing improving demand, and as that happens, their earnings should be going up. That provides the need to expand output and also the ability to raise wages and retain workers."
As the U.S. economy continues to improve, the labor market gets tighter, Naroff said. When a manufacturing worker hears of a job opening at another plant that pays a higher wage for the same skill set, that worker may leave his current position to take the other job.
That leaves the original company with its own job to fill, and as the market becomes tighter, fewer workers are available, especially those who are qualified with the right skill sets. The company may have to consider raising its wages and increasing benefits to retain and attract more workers.
In an effort to improve employee recruiting and retention, Tyson Foods recently announced it would raise wages for most of its chicken plant employees at 40 to at least $10 an hour from $8 to $9 an hour previously. If an employee stays on the job more than a year, that pay bump increases to $12 an hour.
Ben & Jerry's, under parent company Unilever, is paying nearly twice the national minimum wage in recent years, including $16.13 per hour in 2013, according to the company website. The company recalculates the living wage each year to ensure it reflects the actual cost of living in Vermont at that time.
"That’s the pattern that is starting to occur, though not at a rapid pace at all," said Naroff. "But the lower the unemployment rate, the tighter the labor market gets, the more the pressure exists to start raising wages and benefits."