Employment Rates in the Automobile Industry From

Employment rates in the AUTOMOBILE industry from 2007 to 2011

The automobile industry is one of the largest employers of labor in the United Sates employing approximately 880,000 workers, which is about 6.6% of U.S. manufacturing workforce. Overall workforce in the automobile industry includes those working in the assembly plants and motor vehicle manufacturing sectors. Despite the job contribution of the U.S. automobile industry, recent economic decline in the United States has led to the decline in the auto market shares making the major automobile companies working below capacities. Since the beginning of the decade, the automobile industry has laid off approximately 435,000 workers which amount to the 3.3% of all manufacturing jobs in 2008. (Platzer, & Harrison, 2009).

The objective of this paper is to discuss the U.S. employment rates of automobile industry from the second quarter of 2007 to second quarter 2011.

Employment rates in AUTOMOBILE industry from 2007 to 2011

"North American Industrial Classification System (NAICS) classifies companies in the automotive manufacturing industry as part of the larger transportation equipment manufacturing industry (NAICS 336)." (Thompson, & Merchant, 2010 P. 10).The automobile industry is an integral part of the U.S. economy. In 2007, the U.S. automobile industry provided 4.5 millions jobs nationwide, While the automobile industry provides employment to several people in the United States, the employment rates in the automobile industry are higher in the Midwestern and Southern states such as Indiana, Michigan, Kentucky, Indiana, Ohio, Missouri, Tennessee, and South Carolina. (International Trade administration 2010). However, since 2007, the U.S. automobile industry has faced variety of challenges that include deep recession, rising Corporate Average Fuel Economy (CAFE) standards, gasoline prices, and changes in consumer tastes. Many automobile companies have incurred heavy debts due to the recent economic decline. The issues have been aggravated with the cutting down of production due to the decline in the market shares. The restructuring of the Detroit 3, General Motors, Ford, and Chrysler have also affected the employment level in the U.S. automobile industry. With the shift in consumer tastes, the Detroit 3 continues to lose market shares to foreign based auto companies, which makes the market shares of the Detroit 3 falling below 50% in 2008. The global economic recession between 2008 and 2009, and the increase in the price of gasoline that has exceeded $4.00/gallon have led the U.S. auto consumers to shift to the small more fuel-efficient vehicles. The overall factors lead to the decline of market shares of the Detroit 3 to 6.3 millions in 2008.

The impact of the cumulative economic problems has made the automobile industry to implement series of structural changes to resist the economic recession. Part of the structural changes implemented was the cutting down of the number of workers in the industry, which led to the massive job loss in the automobile industry. The job loss experienced by the automobile industry is approximately 11% of the manufacturing job loss. With these problems, the automobile sector could only boast of the 711,200 jobs in the first quarter of 2009. In the second quarter of 2009, the employment rate in the automobile industry has fallen to 623,000. With the bankruptcy plan experienced by some automobile companies, the hourly employment levels have also reduced from 1.02 millions hours from 2007 to 707 thousands in 2011 revealing more than 30% decline in the hourly employment rates. (See Table 1).

Table 1: Employment, Hours, and Earnings of U.S. Automobile Industry between 2007 and 2011

Numbers in THOUSANDSHaut du formulaire

Bas du formulaire

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2007

2008

2009

2010

2011

Source: Bureau of Labor Statistics, 2011.

From 2008 to 2009, the automobile industry continues to experience decline in the employment rates with 38,000 reductions in the job levels. The illustration in Fig 1 reveals that U.S. automobile industry suffers steep decline in the employment rates between 2007 and the second quarter of 2009 because of the continuous increase in the job loss. The reason has been due to the global economic crisis that has affected many advanced since 2008. In addition, the restructuring plan undergone by the Chrysler, one of the Detroit 3, in the fourth quarter of 2008 has also contributed to the decline in the employment rates.