U.S. Department of Commerce 

Economics and Statistics Administration 

By 

Regina Powers 

and David S. 

Langdon, Office 

of the Chief 

Economist 

ESA
 

Issue Brief
 

#02-13
 

August
 

2013
 

The Earnings of New Hires in Manufacturing 

Executive Summary 

Manufacturing jobs, including new manufacturing jobs, continue to deserve their reputation as 

good jobs.1 We use a relatively new data source, the Quarterly Workforce Indicators (QWI), to 

analyze the earnings of new hires relative to incumbent workers in both manufacturing and nonmanufacturing. We find that new hires in the manufacturing sector earn more than new hires in 

other industries and have done particularly well since the recession began. 

New hires in manufacturing enjoy an earnings premium relative to other new hires. This 

premium peaked during the recession but has returned to near its pre-recession average. 

At the end of 2011, the manufacturing earnings premium for new hires stood at about 38 

percent. 

At the end of 2011, the ratio of new hire earnings to incumbent earnings was about 8 percentage points higher in manufacturing than in other industries. 

Over time, the earnings of new hires relative to incumbents have been consistently higher 

in manufacturing. From 2000 to 2011, the earnings of new hires were about 70 percent of 

incumbents’ earnings in manufacturing, compared to an average of 60 percent in other 

industries. 

Since the recession began, real average earnings for new hires in manufacturing grew 3.5 

percent, while earnings of incumbents in manufacturing grew about 2.4 percent. Over the 

same time, real earnings for hires in other industries were flat, and earnings for incumbents in other industries declined. 

Overview 

Jobs in the manufacturing sector are generally considered “good jobs”—a source of aboveaverage wages and benefits, full-time hours, and stable employment for millions of Americans. 

During the recent recession, the decline in the number of manufacturing jobs accelerated, as 

payroll employment in manufacturing fell by over 16 percent between the fourth quarter of 

2007 and the first quarter of 2010. However, since the beginning of 2010, payroll employment 

in manufacturing has experienced its first extended period of growth since the 1990s. Our 

analysis explores whether these new manufacturing jobs are still good jobs, addressing 

whether new hires in manufacturing continue to enjoy a wage premium over other new hires 

and whether new hires in manufacturing earn less, relative to incumbent co-workers, than in 

the past. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

We analyze the earnings of new hires and incumbent 

workers in both manufacturing and non-manufacturing, 

employing a relatively new data source, the Quarterly 

Workforce Indicators (QWI).2 We find that new hires in 

the manufacturing sector earn more than new hires in 

other industries and have done particularly well since 

the recession began. Also, the earnings of new hires in 

manufacturing relative to incumbents have been relatively consistent over the last ten years. Therefore, our 

analysis suggests that manufacturing jobs continue to 

deserve their reputation as good jobs. 

The Quarterly Workforce
 

Indicators Data
 

The QWI are a product of the U.S. Census Bureau within 

the Economics and Statistics Administration of the Department of Commerce. They are derived from state 

administrative records, namely state unemployment insurance systems, and link an individual worker with an 

employer to provide job histories over time. Earnings 

histories are developed from quarterly reports of worker 

earnings provided by the employer under the state unemployment insurance systems. The QWI are aggregated at various levels of geographic, industry, and 

demographic detail to provide information about employment, job creation, worker turnover, and earnings. 

The QWI include counts and average monthly earnings 

for “stable” employees and “stable” new hires. Stable 

employees are those who are employed for at least a full 

quarter; stable new hires are those who worked for at 

least a full quarter for an employer but who did not work 

for that employer in any of the four quarters prior to 

employment.3 We define incumbent workers as stable 

employees who are not stable new hires. We use the 

QWI counts and average earnings information for new 

hires and for all employed to derive the number of incumbent employees and their average earnings. We 

then separate incumbents and new hires according to 

whether their employers are in the manufacturing sector. This allows us to examine the earnings of new hires 

in manufacturing over time, relative to incumbents and 

relative to new hires in other industries. 

We report results for the last quarter of 2011 using 

data for all 50 states providing QWI data.4 However, to 

examine trends over time while avoiding spurious results based on increasing state participation in the QWI 

over time, we limit our analysis to the 34 states for 

which data on new hires are available from the first 

quarter of 2000 through the fourth quarter of 2011.5 In 

order to adjust for seasonal variation, we calculate 

moving 4-quarter averages. 

Earnings of New Hires 

At the end of 2011, across all participating states, the 

average monthly earnings of new hires was 38 percent 

higher in manufacturing than in other industries. For 

the workforce as a whole, including both new hires and 

incumbents, earnings were 25 percent higher in manufacturing than in other industries. Note that this earnings premium results from differences in hourly earnings as well as differences in hours of work per month 

and is therefore higher than the premium previously 

estimated by ESA based on hourly earnings and compensation only.6 

Analysis of states participating since 2000 shows that 

the earnings of new hires in manufacturing have fared 

well compared to the earnings of new hires in other industries. Figure 1 illustrates the earnings premium, that 

is, the average percentage earnings gap enjoyed by new 

hires in manufacturing compared to new hires in other 

industries. Prior to the recession, earnings of new hires 

in manufacturing were about 37 percent higher than 

new hire earnings in other industries. The premium for 

new hires in manufacturing began to increase in 2008, 

peaking at just over 50 percent in 2010. The premium 

has declined during the recovery but remains above its 

pre-recession level. 

Figure 2, which shows the manufacturing earnings premium for new hires along with the rate of new hires in 

manufacturing, highlights the recent counter-cyclical 

behavior of the earnings of new hires in manufacturing. 

The rate of new hires in manufacturing is defined as the 

number of stable new hires as a share of all stable employees in the manufacturing sector. As this rate de2 U.S. Department of Commerce, Economics and Statistics Administration 
Figure 1: Earnings Premium for New 

Hires in Manufacturing 

2000-2011 

60% 

40

50% 

% 

-

- .,---.........._, / ~ 

~ .......... 

30% -

20% -

10% -

0% 

2001 2003 2005 2007 2009 2011 

Source: ESA ca lcu lations of Quarterly Workforce Indicators for stable new hires. 

Note: Data are 4-quarter moving averages for a 34-state cohort for Q4 2000-Q4 2011. 

Shaded areas indicate recession periods. 

Earnings 

Figure 2: Manufacturing New Hires Rate 

and Earnings Premium 

2000-2011 

Premium Hires Rate 

70% 7.0% 

60% 6.0% 

50% 5.0% 

40% 4.0% 

30% 3.0% 

20% 2.0% 

10% 1.0% 

0% 0.0% 

2001 2003 2005 2007 2009 2011 

Source: ESA ca lcu lations of Quarterly Workforce Indicators for stable new hires. 

Note: Data are 4-quarter moving averages for a 34-state cohort for Q4 2000-Q4 2011. 

Shaded areas indicate recession periods. 

U.S. Department of Commerce, Economics and Statistics Administration 3 
 

 

 

 

clined during the most recent recession, the earnings premium increased. One possible explanation for this pattern is 

that, as employers hired fewer workers during the recession, those workers who were hired were more skilled.7 If this 

compositional shift toward more highly skilled hires was more pronounced in the manufacturing sector, then the relative earnings of hires in manufacturing would increase. Indeed, nominal average earnings of new manufacturing hires 

increased by 11 percent between Q4 2007 and Q2 2009, compared to a 2 percent increase over the same period for 

hires in other industries. 

Comparing the earnings of new hires to those of incumbents provides some indication of how new hires have fared 

relative to their counterparts with more tenure. Data from all participating states show that, at the end of 2011, the 

average earnings of new hires in manufacturing were about 68 percent of the average earnings of incumbents in manufacturing. In contrast, for non-manufacturing, the earnings of new hires stood at about 60 percent of the average earnings of incumbents, an 8 percentage point gap. 

Figure 3 shows the trend in earnings of new hires relative to incumbents in both manufacturing and non-manufacturing. 

Early in the 2000s, the relative earnings of new hires in manufacturing and non-manufacturing fell somewhat, and then 

leveled off in the middle of the past decade. Further, in the most recent recession, there was a spike in the relative 

earnings of new manufacturing hires, while the ratio for other sectors was flat. This spike for new hires in manufacturing lends support to the idea that there were compositional shifts toward higher-skill workers among new hires in 

manufacturing. Figure 3 also highlights that the relative earnings of new hires in the manufacturing sector have been 

consistently above those in non-manufacturing. Overall, between 2000 and 2011, the earnings of new hires in manufacturing averaged about 70 percent of the earnings of incumbent workers. For non-manufacturing industries, the average earnings of new hires were about 60 percent of incumbent workers’ earnings. 

4 U.S. Department of Commerce, Economics and Statistics Administration 
 

 

New hires in manufacturing saw earnings, net of inflation, increase by 3.5 percent from the start of the recession, 

while incumbent earnings increased by about 2.4 percent. (See Figure 4.) In contrast, earnings of new hires in other 

industries were relatively flat, while the average earnings of incumbents in other sectors declined. Separate analysis 

for the recession and recovery periods (Q4 2007 to Q2 2009 and Q3 2009 to Q4 2011, respectively) shows that real 

earnings for new hires in manufacturing increased 9.4 percent during the recessionary period and declined 3.3 percent thereafter. Incumbents in manufacturing showed average real earnings declines of 1.4 percent during the recession, and gains of 4.9 percent thereafter. New hires and incumbents in non-manufacturing saw average real earnings gains of 0.2 percent and losses of 2.1 percent, respectively, during the recession and increases of 2.0 percent 

and 0.4 percent thereafter. 

Confirming Evidence from the Current Population Survey 

To confirm our results on the earnings of newly hired workers, we conduct a separate analysis using data from the Current Population Survey (CPS) outgoing rotations files for 2011 and 2012. The results of this analysis confirm that new 

hires in manufacturing have higher relative earnings than new hires in other sectors. 

Survey respondents in the CPS outgoing rotations files provide information about their industry of work and their 

weekly earnings. Moreover, under the survey design of the CPS, information about labor force status and the industry 

of work of these outgoing rotations respondents is also available for the preceding three months, thereby providing an 

alternative way to analyze earnings of new hires relative to incumbents. We exploit this additional information by 

matching respondents in the outgoing rotations files to their survey responses three months prior. 

In order to approximate the identification of new hires in the QWI data, we attempt to identify respondents who are 

U.S. Department of Commerce, Economics and Statistics Administration 5 
 

 

 

 

new to the job. We define new hires as those who 

were employed during the month in which they participated in the CPS outgoing rotation but who were either 

not employed or were employed in a different industry 

three months prior. Using these data, we find that, for 

both 2011 and 2012, newly employed workers in manufacturing earn about 80 percent of what incumbent 

workers earn. In contrast, in other industries, newly 

employed workers earn about 70 percent of what incumbents earn. Thus, these ratios, though roughly in 

line with the results based on the QWI data, show 

somewhat higher relative earnings for new hires in both 

manufacturing and non-manufacturing. 

There may be several reasons why the ratios calculated 

from the CPS data are not directly comparable to those 

calculated using the QWI data and why the QWI data 

may give a more accurate picture of the earnings of 

new hires relative to incumbents. First, our match rates 

for the CPS respondents’ two monthly interviews hover 

around 80 percent, leaving some potential for bias resulting from necessarily including only individuals who 

respond in both survey months, particularly if we believe that earnings are positively correlated with the 

propensity to respond to surveys. In contrast, the QWI, 

which are based on administrative data, do not include 

the same potential for sample selection bias. 

Second, the approach we use for matching the CPS respondents’ two interviews does not allow for the same 

identification of stable hires and incumbent employees 

as in the QWI data. The CPS respondents we identify as 

new hires are persons employed in a different industry 

than they were three months prior. This approach captures some hires who subsequently work for less than a 

full quarter and would therefore be excluded from the 

QWI counts of stable hires. Likewise, the CPS respondents we identify as incumbents are persons employed 

in the same industry as they were three months prior. 

This approach could include as incumbents persons 

who worked for a full quarter subsequent to being 

hired; these persons would be considered stable hires, 

and therefore not incumbents, in the QWI. Given these 

limitations, the results for the QWI are more likely to 

reflect the comparisons between permanent hires and 

incumbent workers that can help us assess new manufacturing jobs. 

Conclusion 

Using the QWI data, a relatively new source of data on 

workers and their earnings, we see that, at least over the 

last couple of years, new hires in the manufacturing sector fare better than new hires in other industries. The 

QWI data suggest that both hiring of stable workers in 

manufacturing and the earnings of those new hires have 

been relatively strong in recent years, confirming the notion that new manufacturing jobs are, indeed, good jobs 

and continue to be so. Analysis using CPS data provide 

comparable results to those derived from the QWI data, 

providing additional confidence in the accuracy of our 

findings. 

Further research is needed to explain whether compositional shifts in the quality of new hires drive the results 

shown here. In particular, additional analysis at a more 

detailed industry level can shed light on whether the 

trends in earnings are widespread among manufacturing 

industries, or instead reflect differential hiring rates and 

relative earnings within various manufacturing industries. 

Such research using the QWI can shed light on the particular manufacturing industries that generate good jobs 

and allow us to follow trends in those good jobs. 

6 U.S. Department of Commerce, Economics and Statistics Administration 
 

 

 

 

 

 

 

 

 

Endnotes 

1 For a discussion of manufacturing jobs as good jobs, see Economics and Statistics Administration (ESA). (2012). The benefits 

of manufacturing jobs. Retrieved from http://www.esa.doc.gov/ 

Reports/benefits-manufacturing-jobs 

2 Most published data are of limited usefulness in specifically 

examining the earnings of new hires to help answer these questions. For example, the Job Openings and Labor Turnover Survey, published by the Bureau of Labor Statistics, provides information about the number of monthly hires by sector or industry, 

but no information about the earnings of those hired workers. 

The Bureau of Labor Statistics also publishes the Current Employment Statistics data, but these provide information about 

average earnings based on all jobs in an industry, including both 

new hires and incumbent workers. The Current Population Survey published by the Census Bureau tracks survey participants 

over several months and provides information about the earnings and industry of employment for individuals, making it possible to identify those who are newly employed and to analyze 

their wages. However, these data suffer from certain limitations 

that are discussed below. 

3 To narrow our analysis to permanent workers, we use the QWI 

measure of “stable” new hires, that is, those who work for at 

least a full quarter after hire. These stable new hires are a subset of total hires; total hires would also include persons hired for 

less than a full quarter. !nother QWI measure, “all stable hires,” 

includes both new hires and recalled workers who subsequently 

work for a full quarter. For the purpose of assessing new manufacturing jobs, we focus on new hires only. 

4 These states include the District of Columbia but not Massachusetts. 

5 These states are: California, Colorado, Connecticut, Delaware, 

Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, 

Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, 

Nevada, New Jersey, New Mexico, North Carolina, North Dakota, 

Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, and 

Wisconsin. In 2011, employment in these 34 states represented 

about 76 percent of all employment and 74 percent of manufacturing employment. Results using this 34-state panel are very 

similar to our results using all states participating in each year. 

6 Economics and Statistics Administration (ESA). (2012). The 

benefits of manufacturing jobs. Retrieved from http:// 

www.esa.doc.gov/Reports/benefits-manufacturing-jobs 

7 This explanation suggests that the composition of new hires in 

manufacturing shifted toward higher-wage workers during the 

recession. For a discussion of this “composition bias” and a general review of the cyclical behavior of earnings, see Abraham, K., 

& Haltiwanger, J. (1995). Real wages and the business cycle. 

Journal of Economic Literature, 33, 1215-1264. 

The authors are economists in the Office of the Chief 

Economist of the U.S. Department of Commerce’s 

Economics and Statistics Administration. 

Technical inquiries:
 

Office of the Chief Economist
 

(202) 482-3523
 

Media inquiries:
 

Office of Communications
 

(202) 482-3331
 

U.S. Department of Commerce 

Economics and Statistics Administration 

1401 Constitution Ave., NW 

Washington, DC 20230 

www.esa.doc.gov 

U.S. Department of Commerce, Economics and Statistics Administration 7