- The revival of manufacturing employment has stalled in the greater Columbus, Ohio area.
- Weekly earnings and hours for manufacturing workers have dropped by roughly half.
- Rapid growth in the logistics industry offers these workers an opportunity to earn extra income until demand and jobs in manufacturing return.
For the past year, the unemployment rate in the Columbus, Ohio metro area has been pretty much the same as the national average. The labor market looks tight, with new jobs being created especially in construction. But there's a subtler shift going on in the Columbus area that has been on the minds of local leaders.
Manufacturing employment has been growing steadily across the country and is now above its pre-pandemic level. This growth has restored a decade of gains that began after the Great Recession that reversed a 30-year downward trend. Yet in Columbus, manufacturing employment peaked a year ago and has begun to decline. And the situation is actually worse than it looks.
A changing role in the supply chain
The Columbus area once employed more than 100,000 people in manufacturing, yet in recent years it has become more of a logistics hub – a trans-shipment point rather than a center of production. In fact, jobs in transportation and warehousing surpassed jobs in manufacturing just before the pandemic, for the first time ever in the metro area:
They haven't looked back since. Manufacturing in Columbus has managed a decent recovery, but job growth in logistics has been surging ahead.
That's especially interesting because of the change in consumers' spending patterns last year. As the service sector reopened after the Omicron wave of Covid-19, people shifted their spending away from goods. But even with fewer goods moving through the supply chain, Columbus's importance in logistics has continued to grow.
The quandary of lower demand
In manufacturing, however, the effect of stalled demand for goods has been dire – not that the chart above shows its full extent. Employment hasn't fallen by much, but earnings for manufacturing workers have taken a tremendous dive:
Average weekly earnings in manufacturing have dropped by half versus their highs in 2017 and by about 40% in the past year and a half alone. That's a huge blow for manufacturing workers, especially against a backdrop of rising prices. As a whole, the Columbus area's workers have seen their weekly earnings rise by almost a quarter since the pandemic began, helping them to keep up with inflation. But not so in manufacturing.
And the reason is simple: hours are down. Lower demand has meant that workers who used to pick up overtime regularly before the pandemic are now essentially working part-time:
Clearly, businesses in the Columbus area have decided to keep people employed but with fewer hours rather than letting many of them go.
It's an understandable approach in a historically tight labor market, especially with major retailers suggesting that the inventories they built up in 2022 may finally clear in the second half of this year. Even if a further economic downturn were to push the unemployment rate up to 4.5% or 5%, bringing workers back could be difficult. So it's easier to hang onto them and try to wait out the lull.
New options in the labor market
In the meantime, though, those manufacturing workers may be looking for extra hours to supplement their incomes. Fortunately, extra hours are exactly what the logistics industry needs. We're increasing our presence in the Columbus area so that we can serve the growing need for warehouse work, as well as in-person shifts in a variety of other roles across the goods-producing and service-producing sectors.
So far this year, our fill rate is about 95% for entry-level warehouse work, and the average hourly pay has been just over $17. That's more than 80% higher than the minimum wage in Ohio, and more skilled roles are paying even higher rates. The variety of shifts available also gives manufacturing workers who are looking for other options in the labor market a chance to learn new skills.
We're hoping to support the Columbus area's workers – as well as its growing businesses – as its economy goes through this transitional period. And who knows... a return of manufacturing jobs may not be too far away.
These links offer more information:
Bureau of Labor Statistics Economic Summary
Ohio Labor Market Information (State of Ohio)
Workforce Data (Policy Matters Ohio)
Columbus Forecast 2023 (Indiana Business Review)
These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 5/11/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:
$0.05 rise in hourly pay
0.5% point drop in share of short-notice shifts
0.3 hours drop in hours per existing worker
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