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The furniture
industry is not a major employer in the United States. Employment in the
American furniture industry stood at 491,200 as of 2002. This is less
than 0.4% of the overall employment in the United States. Even in
relation manufacturing employment, furniture contributes only 2.9%.
It seems that
the furniture industry lends itself less to labor-saving technologies
than other industries. Between 1982 and 2002, the level of furniture
employment grew by 13.6% while total manufacturing employment fell by
11%.
Household furniture manufacturers account for 52.2% of employment in the
furniture industry, or 256,300 persons. The remaining 234,900, or 47.8%,
were employed by office and other furniture manufacturers. Though it
still commands the greater share, household furniture manufacturers
witnessed a gradual erosion in their share of total furniture employment
over the last two decades.
Non-production
worker employment in the manufacture of furniture has grown faster than
that of production workers. The long-term increase reflects both the
introduction of labor-saving technology and the increasingly complex
business environment (which has increased the relative need for marketing
and administrative workers to move furniture products from the plant to
the final consumer).
North
Carolina is the largest furniture employer with almost 68,000 jobs in
2002. California places second accounting for 55,500 furniture industry
employees, followed by Michigan, Mississippi, Indiana, Tennessee,
Virginia, Texas, Ohio, and Wisconsin. These ten states collectively
accounted for almost one-third of jobs in the industry in 2002. The
leading employers among the states in the household furniture segment are
North Carolina, California and Mississippi, while the leading employers
in the office segment are Michigan, California and Illinois. If expressed
in relation to overall employment, furniture manufacturing is most
important in Mississippi (1.9%) and North Carolina (1.6%).
Shipments in
the furniture industry will improve this year and next. Nevertheless,
manufacturers will refrain from hiring any more workers as management
attempts to sustain productivity levels and remain internationally
competitive, at least until the industry regains more healthy
productivity levels.
Household
furniture employment will remain even but office furniture employment
will fall. In the past, employment in the office furniture segment
decline by less that one would have expected in light of the segment's
dismal performance. Office furniture producers deliberately retained the
workers in order to avoid heavy recruitment and retraining costs when the
demand growth returns. The moment of truth in now catching up with the
industry.
Following
material costs, payroll expenses represent the second largest cost
component in the furniture industry. The wage bill - including benefits -
accounts for 23% of the value of shipments. Therefore wages play a
significant role in determining the furniture industry's overall
profitability.
In 2002 the
hourly wage rate in the furniture and fixtures industry averaged $12.65
compared to $15.30 for manufacturing as a whole. In other words, the
average furniture employee's earnings were just 82.7% of those of the
average manufacturing employee. During the past 20 years, this gap has
gradually narrowed. The reason for this difference must be found in the
fact that the output per worker (labor productivity) in the furniture
sector falls short of that among all manufacturers by almost 50%.
Between 1981
to 2001 unit labor costs among manufacturers in general did not grow -
meaning that real wage increases matched productivity gains over that
period - whereas among furniture producers unit labor costs more than
doubled. As unit labor costs grew considerably faster than the prices
received by furniture producers (manufacturers' selling prices) during
the past 20 years, the industry's ability to sustain a high level of
profitability has been curtailed.
The average
production worker in the furniture industry in 2001 was paid an estimated
$25,219. This compares to, an average of $60,069 in value added per
production worker. Within the industry, with the highest earnings are in
the non-wood office furniture segment ($36,248) and the custom
architectural woodwork and millwork segment ($29,523). At the lowest
paying end of the scale is the non-upholstered wood household segment
($22,018) and the metal household segment ($22,065).
The
relatively high wages paid to production workers in the non-wood office
furniture sector are understandable since the value added per production
worker is higher than in any other sector. Not surprisingly, the relative
earnings of production workers follow as similar path as the relative
value added per production worker across the ten furniture industry
segments.
The annual
earnings of workers in the industry varied significantly across the
occupational groups in 2002 ranging from an average of almost $117,000
among chief executives at the top of the scale to an average of just
$19,550 for hand sewers at the bottom of the scale. The average across
all occupations in 2002 was $29,000.
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