There is a quiet crisis happening in the U.S. and not many people are talking or writing about it. But if you are a manufacturing organization with any kind of significant operation in the U.S., you are definitely feeling it: The slow-burning and often overlooked shortage of skilled workers in manufacturing’s hourly space.
As with many quiet crises, this issue has become steadily worse over time without causing an immediate uproar. Some organizations, though, are starting to realize the impact of worker shortages at the hourly manufacturing level and what it will mean for many of America’s largest companies. In an interview on the Office Hours Business Edition podcast, Ford Motor Company CEO Jim Farley recently said:
"We are in trouble in our country. We are not talking about this enough … We have over a million openings in critical jobs, emergency services, trucking, factory workers, plumbers, electricians and tradesmen. It’s a very serious thing."
He went on to say that Ford currently has more than 5,000 open jobs for mechanic positions that it hasn’t been able to fill despite a six-figure starting salary.
With all the focus on the low to no hiring trend, higher unemployment rates and “job hugging,” the worker shortage reality in the U.S. has gone largely ignored in the past year. However, job openings remain high relative to historic norms and manufacturers report ongoing difficulty filling roles.
A gap persists as of January 2026, with 330,000 durable goods manufacturing job openings yet to be filled, according to the U.S. Department of Labor. While this is down from its highest point ever recorded in April 2022 (with 657,000 job openings), the number of unfilled jobs is still slightly higher than what the industry saw for more than a decade pre-pandemic.
What’s causing the shortage?
There are several reasons why the manufacturing sector is feeling this hourly worker shortage more than other industries.
Enduring demographics
During the post-pandemic years of 2021-2022, an unprecedented number of American workers changed jobs in what was then dubbed The Great Resignation. While worker shortages were a hot topic then, there also was much talk about the different generations entering and leaving the workforce and how that was affecting the shortage. That reality is still with us, but because we are in a period of low labor-market demand, no one seems to be focused on the fact that we still have a labor supply issue.
The U.S. has an increasingly aging population and a growing percentage of older workers. The median age of the American worker is 42 years, and more than one-third (34%) are 55 or older. The ability to continue to fill open positions as Baby Boomers exit the workforce has already affected every industry, but manufacturing hourly jobs are particularly impacted with fewer younger workers replacing those retiring.
“Filling open positions as Baby Boomers exit the workforce already has affected every industry, but manufacturing hourly jobs are particularly impacted.”
Jobs have evolved, skills haven’t
Enduring demographics have created labor-supply issues for manufacturing hourly jobs, but the shortage of skilled workers is even more acutely felt. The U.S. Bureau of Labor Statistics (BLS) projects that 2.1 million manufacturing hourly jobs will go unfilled by the year 2030 due to a lack of skilled labor. If you work in manufacturing, you likely feel this even now as jobs go unfilled, especially in maintenance, electrical and other critical areas of the manufacturing sector.
Even jobs that may be considered unskilled (e.g., machine operators, material handlers) have become difficult to fill — or come with the expectation of even more training than was needed in the past. The fact that these jobs are also handling sophisticated machinery and equipment means the learning curve is steeper, not what might have been considered unskilled in the past. In other words, these are not your grandfather’s manual-laborer jobs anymore!
Net-zero immigration
For the first time since the 1960s, more foreign-born people living in the U.S. will likely leave versus the number of those who will enter. In August 2025, The Wall Street Journal (subscription required) wrote:
"Last week, Federal Reserve Chair Jerome Powell said the U.S. labor market has entered ‘a curious kind of balance.’ The demand for workers has cooled, yet the unemployment rate has held steady because the supply of labor has slowed abruptly. Behind that slowing in the labor supply is a dramatic swing in immigration, from one of the biggest waves in U.S. history to almost none. Economists say that could have subtle but lasting consequences."
Whether those consequences are already hitting the hourly manufacturing sector is difficult to say, but with the native-born population shrinking and the need for both skilled and unskilled workers growing, the boost that immigration has historically given to the U.S. labor force likely will not be there for U.S.-based manufacturing companies in the future.
How U.S. organizations are addressing the shortage
Clearly, Ford Motor Company has significantly raised wages for hourly workers as part of its campaign to attract and retain. While higher wages typically are needed in any worker shortage scenario, it is also often as much about how employees are rewarded as it is how much they are rewarded.
To gauge how U.S.-based manufacturing companies are using rewards programs to better attract and retain workers, WTW conducted a survey of 128 U.S.-based companies in June 2025. Going into the survey, our hypothesis was that to most effectively attract and retain hourly workers, manufacturers need to optimize pay and talent programs by ensuring they are customized to the unique needs of this important employee segment.
However, the study found quite the opposite: Most U.S.-based manufacturers have rewards programs that are the same for hourly manufacturing jobs as they are for all other jobs in the organization. In other words, knowledge workers, professional roles (and above) and hourly roles are paid using very similar (if not the same) pay practices and processes. Consider the following.
Base-salary structures and pay-for-performance processes
More than 50% of survey participants use the same base-salary structures and pay-for-performance processes for hourly manufacturing employees as well as the rest of the company. Typically, this means setting individual goals and using them to assess performance with a performance rating tied to an annual salary increase.
If you’ve ever spent time in a plant, you would understand how difficult, dysfunctional and unnecessary it is to try to set individual goals. And if you spoke to supervisors, you also would hear how time consuming (and unnecessary) it is to conduct individual performance assessments.
“If you’ve ever spent time in a plant, you would understand how difficult, dysfunctional and unnecessary it is to try to set individual goals.”
Pay-increase budgets
Four-in-five respondents said their manufacturing pay-increase budget is equal to the overall budget increase. Given the need to upskill the workforce to address the skills gap, as well as the challenge in attracting younger workers, using a different (higher) salary budget for the hourly population should be a priority and discussed as an investment.
Three-quarters of respondents also use a national merit budget survey to set salary-increase budgets for manufacturing employees. This isn’t necessarily a bad practice, but using only a national lens to pay for these jobs is missing the most important driver of competitive pay at these levels: local-market dynamics.
Incentive plan design
More than one-third of respondents use local-site incentive plan design, while around 30% also use standard, non-headquarters incentive plans at all or most sites. Most of the remainder (also around 30%) use the same incentive plans as headquarters workers.
This was the only area of pay practices that we saw some segmentation among the manufacturing hourly population. It is surprising, however, that so many companies still use a corporate annual incentive plan for the hourly manufacturing population; site- or plant-based incentive plans are one of the most effective business tools a manufacturing company has to engage this workforce, drive and reward the right behaviors.
“Site- or plant-based incentive plans are one of the most effective business tools a manufacturing company has to engage this workforce, drive and reward the right behaviors.”
One reaction to the survey findings (and our conclusions) outlined here is that these sound like pay practices that many unions advocate on behalf of their members. While that may be true, it doesn’t mean they aren’t effective in recognizing the unique needs of this population.
Unions are highly successful at controlling the narrative at plant sites in which they organize, and it’s not just about negotiating higher pay levels. Unions understand how the work gets done, what it takes to engage hourly workers and which rewards programs work best in the manufacturing environment. Lessons that employers can learn to take back control of the narrative through more customized and effective reward programs.
One answer: Strategic rewards for hourly manufacturing jobs
Building a strategy to effectively attract and retain hourly manufacturing workers is more than just setting your hourly rates to a certain level in a competitive labor market. Building a strategy that provides a laser focus on the specific and unique needs of this important employee segment will enable you to get ahead of the quiet crisis brewing in U.S. manufacturing.
Here’s how that could work:
- Develop an hourly manufacturing compensation philosophy. Work to create a compensation philosophy specific to this population that defines elements like competitive positioning, pay for performance, strategic alignment and transparency that are customized to this population.
- Determine best-fit pay program design for hourly manufacturing jobs. From different salary structure designs to the salary increase process and from incentive plan design to recognition programs, the design, delivery and management of pay should be tailored to recognize the unique realities of these jobs and the needs of these employees.
- Consider a customized career framework for hourly manufacturing jobs. Define what a career means for these jobs and how employees can progress through different career paths rather than the more traditional view of these jobs as a singular set of skills or as dead-end jobs.
- Work on the overall hourly manufacturing employee experience. It’s worth exploring how the employee experience may — and should — differ for hourly manufacturing employees. From the work environment to flexible scheduling … even certain benefits and wellbeing programs. Everything should be considered in how best to shape this experience to the best effect.
Labor costs better managed, business outcomes improved
While creating a customized strategic rewards approach for hourly manufacturing workers is not easy, it has the potential to:
- Better manage labor costs overall and through volatility
- Improve targeted attraction and retention
- Focus on business outcomes like productivity, efficiency and safety
- Deliver an overall improved employee experience
With the quiet crisis in manufacturing getting increasingly louder, don’t you want to be at the forefront of solving this before your competitors do?
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