Employment in Poultry Plants

Chart 2. Employment in the poultry and red meat products industry, 1972-92
Employment Employment
_it ousands) {in thousands)
240 VA 20
= Red meat |”
20 + 20
180 | 18
160 | 10
140 7 140
12 4 12
10 —| 100
# Poultry do
eo 70
“ 4
a 4a
o UL 4 4 1 L 1 1 L 4 4 1 1 1 1 i 1 1 1 1 1 rT °

1972 1974 1976 1978 1980, 1982, 1964 1986 1988 1900 1992

try industry could take a number of courses in
the future. The first course is the optimistic pos-
sibility that poultry will continue to find new
markets and expand its labor-intensive, value-
added products. Employment, therefore, could
continue to grow at a healthy rate. More likely,
however, is a second course, characterized by

Footnotes

slowing demand as markets mature and contin-
ued investments in machinery and technology
diminish labor dependency. Under these circum-
stances, poultry employment could realize much
slower growth, closer to the 1.1-percent average
annual growth projected for all meat products
through the year 2005.8 i

' Before 1987, sic 2015, poultry slaughtering and pro-
cessing plants, was previously split into two other sic’s:
poultry dressing plants, sic 2016, and poultry and egg pro-
cessing, sic 2017.

2 The connection between cholesterol and fat and heart
disease was never fully cohesive or convincing until the early
1980’s. Consistent warnings against the consumption of red
meats came as early as 1977, from both the ongoing
Framingham study and Sen. George McGovern’s Select
Committee on Nutrition and Human Needs. For more infor-
mation, see Thomas Dawber, The Framingham Study (Cam-
bridge, ma, Harvard University Press, 1980) pp.124—4] and
Matt Clark and Dan Shapiro, “Diet Crazes.” Newsweek, Dec.
19, 1977, pp. 68-69. For colon cancer findings, see S. Palmer
and K. Bakshi, “Diet, nutrition and cancer: interim dietary
guidelines,” Journal of the National Cancer Institute, June
1983, pp. 1151~70.

34 Monthly Labor Review June 1994

3 Food Consumption, Prices, and Expenditures Survey
(U.S. Department of Agriculture, Economic Research Ser-
vice), various annual releases.

4 Industrial Production and Capacity Utilization,
G.17(419) (Washington, Board of Governors of the Federal
Reserve System), various releases.

5 Livestock and Poultry, Situation and Outlook Report
(U.S. Department of Agriculture, Economic Research Ser-
vice, August 1993), LPs-61.

© Productivity Measures for Selected Industries and Gov-
ernment Services, Bulletin 2421 (Bureau of Labor Statis-
tics, Office of Productivity and Technology, 1993), pp. 14-15.

7 1991 Annual Survey of Manufactures, M91(AS)-1 (Bu-
reau of the Census), various annual releases.

8 James C. Franklin, “Industry output and employment,”
Monthly Labor Review, November 1993, p. 53.



Ron L. Hetrick

Ron L. Hetrick is an
economist in the Division
of Monthly Industry
Employment Statistics,

Bureau of Labor Statistics.

Why did employment expand
in poultry processing plants?

Dietary health studies stimulated a shift in meat
consumption from beef and pork to poultry, resulting
in strong job growth in the poultry processing industry

uring times when most manufacturing
Disses have experienced restructur-

ing, technical innovations, and job loss,
poultry slaughtering and processing plants ex-
perienced vigorous growth in employment.! This
surge reflected consumer’s unprecedented shift
from red meat to what was believed to be the
healthiest of the meat products—poultry.

This article explores the reasons behind em-
ployment growth in poultry slaughtering and
processing plants and offers some explanation
for its vitality. Further, it demonstrates how this
somewhat minor segment has kept employment
levels relatively stable in the entire food prod-
ucts industry.

Background

Poultry slaughtering and processing plants make
up one of three subcomponents of the meat prod-
ucts industry. The other two are meatpacking
plants, which engage in the slaughtering of cattle,
hogs, sheep, lambs, and calves for immediate use;
and sausages and other prepared meats, which in-
clude establishments that purchase carcasses mainly
to process into various prepared meat products. For
the purpose of comparison in this article, these two
industries are combined and referred to as red meat.

Comparative payroll employment data be-
tween red meat and poultry began in 1972. Poul-
try employment increased by 2 percent from
1972 to 1979, and subsequently jumped to a 4-
percent annual growth rate from 1980 to 1992
for a total 96-percent increase over the period.
This contrasts with employment in red meat,
which had no growth during the entire period,
because mechanization increased productivity at
atime of very little growth in output. These trends

in red meat employment closely mimicked what
was occurring in the overall food industry, which
lost jobs at an annual rate of 0.4 percent through-
out the eighties because of widespread mecha-
nization and technological improvements. In this
context, the strong gains in the poultry industry
during the 1980-92 period are worthy of note.

Health concerns + new products = jobs
A preference for poultry. Driven by suggestions
in the 1970’s that red meat may be linked to cer-
tain heart-related disorders and colon cancer,
consumers fundamentally changed their eating
habits.? The resulting substitution of poultry for
red meat, combined with a population eating
more meat products per person than ever before,
produced a per capita poultry consumption in-
crease of 48 percent from 1980 to 1992.3 (See
chart 1.) When increases in per capita poultry
consumption combine with population growth,
the 66-percent gain in total pounds of poultry
consumed is even more impressive. Both per
person and total consumption changes are illus-
trated in the following tabulation:

Consumption in pounds
Other

Allmeat Poultry meat

Total (in thousands)
38,031 9,240 28,791
1992 . 44491 15,338 29,153
Change ... 6,460 6,098 362

Per person

1980... 167.0 40.6 126.4
1992 . 174.1 60.0 114.1
Change . 7A 19.4 -12.3
Monthly Labor Review June 1994 31

HT


Employment in Poultry Plants

New chicken markets. The dramatic rise in
poultry demand led to new products on the mar-
ket and was reflected in both production and
employment in the industry. Production increased
89 percent from 1980 to 1992 and maintained
annual growth rates of around 7 percent through-
out the period, compared to that for red meat (0.6
percent).4 This substantial rise in production
caused poultry employment to expand markedly,
as companies responded to the surge in demand
by developing a broad and innovative array of
new products. These ranged from unprocessed
chicken and turkey parts for expanding menu
ideas in homes and restaurants, to the more la-
bor-intensive, processed items such as chicken
frankfurters, breakfast/lunch meats, and pre-
cooked variations like barbecued or roasted
chickens. Boosted by this innovation, increases
in poultry consumption led to a 64-percent gain
in poultry employment from 1980 to 1992, toa
level of 210,000. (See table 1 and chart 2.)

Production and productivity. The increasing
demand for poultry was so strong that produc-
tion, employment, and productivity all surged
ahead. Workers in poultry establishments are
heavily concentrated in production work, with 9

of 10 workers involved in that process, compared
with 8 of 10 in the red meats segment and 7 of
10 in manufacturing. However, on average, each
worker in the red meat industries produces 15
percent more pounds per year than each poultry
worker. Therefore, the substitution of poultry for
red meat, in itself, resulted in some job creation
because more labor was required to produce each
pound of poultry.5

Despite employment gains in the poultry prod-
ucts industry sector, productivity increased at an
annual average rate of 3.1 percent between 1980
and 1990, while the red meat industry, which lost
4 percent of its employment, averaged a mere
0.5-percent annual increase in productivity.° The
gains in output per hour worked in the poultry
processing industry were achieved without ex-
tensive investments in technical innovations. In
fact, the poultry industry's capital expenditures
on new and used equipment per employee aver-
aged 45 percent below the per employee aver-
age for all manufacturing workers throughout the
1980’s, as compared with around 30 percent be-
low for workers in the red meat industry.”

Incentives to invest in technical innovations
are lessened by the comparatively low average
hourly earnings in poultry. In 1980, production

Chart 1. Poultry and red meat consumption, per capita, 1980-92
Consumption ‘Consumption
(boneless weight (boneless weight
in pounds) in pounds)
140 140
‘0 pO 120
Red meat
100 L ~| 10
wor 789
° PO °
or 40
Poultry
ae 4 2
oUt 1 1 L 1 1 1 (on n 1 aid,
1980 1982 1984 1986 1088 1900 1902
SOURCE: U.S. Department of Agriculture.

32 Monthly Labor Review June 1994



Table 1.
[Levels in thousands)

Distribution of employment in the meat products industry, 1980, 1985 and 1992

Employment
1960 1985 1992 ‘change.
sic Industry 1980-82
Level | Percent | Level | Percent | Level | Percent | (percent)
201 | Meat products..... 358.4 100 361.7 100 | 433.6 100 21.0
2011 | Meat packing plants 1606 | 44.8 1403 | 388 | 1364 | 312 -15.3
2013 | Sausages and other
prepared meats : 70.1 | 19.6 745 | 206 089 | 205 26.8
2015 | Poultry slaughtering and
processing 2093 | 483
Table 2. Distribution of employment in the food products industry, 1980, 1985, and 1992
(Levels in thousands]
]
1980 1986 1992 Employment
sic Industry
Level | Percent | Level | Percent | Level | Percent (percent
20 | Food and kindred
products seeeeeee | 1,704 100 1,599 100 | 1,654 100 29
201 | Meat products. -| 358 | 21.0 362 | 226 434 | 262 21.2
202 | Dairy products... 02... 175 | 103 162 | 10.1 152 92 13.1
203 Preserved fruits and
vegetables.......... 246 | 144 225 | 14.1 246 14.9 0.0
204 | Grain mill products... 144 a5 125 78 124 75 ~13.9
205. | Bakery products... 230 | 135 26 | 135 207 125 ~10.0
206 | Sugar and confectionery
products we 108 63 99 62 104 6.3 -37
207 | Fats and oils ..- 44 26 35 22 32 19 -273
208 | Beverages... | 234 | 13:7 214 | 134 175 | 106 25.2
209 | Miscellaneous food and
kindred products .... 165 97 161 10.1 180 | 10.9 a4

workers in poultry processing made an average
of 55 percent less per hour than the average red
meat worker. The gap was reduced to 20 percent
by the end of 1992 as poultry workers’ average
earnings grew at about the same rate as both all
manufacturing industries and total private indus-
try, while earnings for red meat workers grew
very slowly as the following tabulation shows.
Still, poultry workers’ hourly earnings remain
the lowest in the entire food industry and one of
the lowest in manufacturing.

Earnings Change,
1980-92
1980 1992 (percent)

$6.66 $10.58 59
7.27 11.46 58
8.28 9.39 13
4.53 7.26 60

Impact on the meat products industry. Growth
of the poultry industry has resulted in strong
employment shifts within the entire meat prod-
ucts industry. Since 1980, the Proportion of meat
products employees that work in poultry has
grown from just one-third to nearly one-half. The
robust growth in the number of poultry process-

ing workers has brought the meat products in-
dustry healthy employment gains, economic ex-
pansion, and stability during the past three re-
cessions (1980, 1981-82, and 1990-91). From
1980 to 1992, the total meat products industry
added 75,000 jobs, up 21 percent; all of the gains
were in poultry, compared with red meat. Even
during the most recent recession, meat products
added 4,000 workers, with half of the gains in
poultry. The substantial employment increases
since 1980 were unequaled throughout the rest of
the food industry components, which instead ex-
perienced almost universal declines. (See table 2.)

Continued growth or slowdown?

In an industry such as poultry processing, growth
is heavily influenced by changing tastes and pref-
erences. A strong increase in consumption can
result in substantial job growth in spite of gains
in productivity. Foods are also subject to tran-
sient consumer eating habits often driven by
health concerns, which can change demand
markedly. Products such as oat bran, granola, and
sugar substitutes are just a few beneficiaries of
this phenomenon. Given the changing nature of
consumer preferences, employment in the poul-

Monthly Labor Review June 1994 33

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