On February 10, Carrier announced that 1400 jobs making furnaces and heating equipment in its Indianapolis plant were moving to Mexico by the end of 2019. Correspondingly, the impact of offshoring has been quantified more generally in recent academic research.
I thought today we could connect real people in one plant to the offshoring big picture.
Carrier Jobs
Let’s start with management’s 3 1/2 minute announcement that the plant would close:
Looking at the people affected by the Carrier decision, a NY Times article introduced us to Jennifer Shanklin-Hawkins who assembles batches of rods that control furnace air flow. At $21.22 an hour, her assembly line job requires 10-hour shifts and a 40 to 60-hour workweek. Combined, her paycheck, pension and benefits meant that she and her husband ( a truck driver) could send a son to college and raise two other children. Describing her job, she said, “It’s cool working there…”
In Mexico, Carrier pays a permanent worker the equivalent of $19 a day. So you can see why, referring to their Carrier subsidiary, a United Technologies executive said the firm had transferred two-thirds of its “manufacturing footprint” to lower income countries. His rationale was typical for all multinationals. “We’re an American company but we compete globally.”
The Offshoring Picture
When economists from Penn, Hebrew University and Tufts quantified the impact of offshoring in a December 2014 paper, they focused on the firm and the worker.
Their conclusions?
- Mexico has been a top destination
- Plants with highly paid workers are more likely to move.
- Heavy equipment manufacturers and auto makers have the strongest incentive to relocate a U.S. plant.
- Older, less-educated employees who have to switch to lower paying service sector jobs suffer the most.
Sounds like Carrier.
Our Bottom Line: The Shrinking Middle Class
Using income as their defining characteristic, Pew tells us that the middle class is shrinking.
You can see below that a 5-person middle income household has a median income of $54,053.
Pew also reports that “…the operators group (comprised primarily of machine operators, equipment assemblers and other manufacturing jobs, and accounting for 4% of employed adults) were the most likely to experience a shift downward: Lower-income workers made up 24% of that group’s workers last year [2014], up from 16% in 1971.”
And that returns us to the probable impact of Carrier’s offshoring decision on Jennifer Shanklin-Hawkins.
