Jobs Data Question

In 1946, a factory might employ its own cafeteria staff, the people who cleaned the bathrooms and windows, the folks who painted the building, even mechanics for the motor pool.  Today, all that stuff is outsourced.  The work and jobs are still there, but the jobs have been outsourced to service companies so the factory can focus just on production.

Are manufacturing jobs numbers smart enough to take this into account, or is the (relative) decline in manufacturing jobs in part attributable to unwinding of vertical integration and outsourcing of work to service companies?

To be very specific:  Is an accountant in a factory a manufacturing job, or a service job in the government numbers?  Certainly this person is a service worker if he is an independent contractor working for the factory, but what if he is employed in the factory with an office in the factory on the factory's payroll?

Anyone know?


  1. Brian Dunbar:

    I know that I am not counted as a manufacturing employee, although I am employed by a manufacturing company and support the systems that the guys on the floor use to make product.

    Something to do with taxes: the guys working for manufacturing work for one corporate entity, and the folks in 'corporate' work for another.

  2. m:

    Yes, that number takes that into account. Employees are counted by the type of actual work they do, not, say, the SIC code of the company they work for.

    Think of your L&I filings...

  3. AnObserver:

    Overhead has always been separated from manufacturing in accounting.

  4. Uncle Bill:

    I worked in R&D in a very large chemical company for 32 years. I was astonished to find out that we were considered to be in the service sector, since we did not directly work in production.

  5. Mark:

    It depends on who is counting but for Bureau of Labor Statistics (the official Department of Labor numbers)anyone who works for a manufacturing company is a manufacturing employee.

  6. Tim Worstall:

    I'm under the impression that if employed in a manufacturing company, then a manufacturing worker. If seconded to, hired to, servicing a manufacturing company, then not.

    But to check properly I would give BLS a call on Monday. They're very good indeed at answering such questions. But tell them you're a reporter and that you want to talk to hte press department.

  7. W Bowser:

    I've worked in accounting both for manufacturers as well as the firms that provide services to them. In service firms, because of the way the time and billing systems work, I don't see how they could capture the time incurred for any specific industry. So time incurred by the provider's staff gets lumped into the service bucket. If you think about the system, the data would result in a full-time equivalent measure as staff are interchangeable (to the billing system, not always to the client), which is another can of worms. How many hours are sufficient to have a manufacturing (or service, etc) job?

    As for the filings by manufacturers, you have people who perform both direct and indirect functions. I don't have an L&I form in front of me so can't say if the form provides a place to split people.

    As always, the data is rife with interpretation errors - what one company considers indirect may be considered direct by another.

    In summary, most of these issues are marginal ones and the reporting errors cancel out. You would also need to know if the reporting methodology has changed over time.

  8. Mark:

    Yes, when people speak of the "disappearing" manufacturing jobs they are talking about the tremendous number of backend jobs that used to work directly for the manufacturing firm that are now outsourced and classified differently.

  9. Brandybuck:

    What's the big hoopla about service jobs anyway? As a software engineer, my job falls under the service category. According to the punditocracy, that makes it an undesirable job. WTF?

  10. markm:

    I've worked as an engineer for electronic contract manufacturers for 19 years. When I started in 1990, the plant employed over 300 people, about 50 of them in office jobs. There are 75 people at my current employer, about 25 in the office - and we're manufacturing more and much higher quality product than the first plant. We do contract out cleaning, HVAC maintenance, and computer/network/telephone tech support, but that's only about a half dozen jobs. At least for electronic assembly, the increase in basic productivity far outweighs all other considerations.

    In the long-term, any manufacturing business that survives in the USA or other first world countries will see their production floor turn into a line of automated machinery, with a few machine tenders working out of sight of each other.

    However, the office staff isn't going to shrink much more. Customers want to hear a _human_ assuring them that their boards will ship on time, in spite of frequent ECN's, parts going obsolete, etc. So we still need sales people to reassure the buyers, while the engineers scramble to get together with the customer engineers and work out all the changes. And what keeps any contract manufacturer in business in the USA is that our sales people will return a call in minutes, versus waiting for someone to get up in Asia, and our engineers will implement an ECN in a few days, versus weeks when the discussion is crossing 12 time zones. There's no way we can match Chinese prices, but our service is incomparable.

  11. Steve:


    I work in the office furniture industry. While not a big industry, the bulk of the global players manufacture in 1st world countries. The customers are in the first world, the work is all make to order, the lead times are fairly short, and the job corrections/change orders are often numerous. A lot of the work is manual, and thus far, has proven fairly resistant to automation.

    Maybe you could argue that we're closer to construction that manufacturing, but I don't think we're going away any time soon, since 3rd world countries seem to not be able to crank out make-to-order stuff like they can crank out widgets, and if they screw it up, there's no time to fix it before the customer needs to be in his building.