LOUISVILLE, Ky. - Manufacturers are hiring again in America, softening a long slide in factory employment. But for a new generation of blue-collar workers, even those protected by unions, the price of employment is likely to be lower wages stretching to retirement.

That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so.

The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff - with the additional concession that the newcomers will not catch up for the foreseeable future. Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.'s director of collective bargaining.

"Some companies want to keep work here, or bring it back from Asia," Mr. Pavy said, "but in order to do that they have to be competitive in the final prices of their products, and one way to be competitive is to lower the compensation of their American workers."

The shrunken pay scale for newcomers - $12 to $19 an hour versus $21 to $32 an hour for longtime workers - threatens to undo the middle-class status of even the best-paid blue-collar jobs still left in manufacturing. A similar contract limits the wages of new hires at a nearby Ford Motor Company stamping plant, but neither G.E.'s 2,000 hourly workers nor Ford's 2,900, nor their unions nor the mayor, Greg Fischer, have objected.

Quite the contrary, all argue that job creation must take precedence over holding the line on wages, given that the unemployment rate in this Ohio River city is above 9 percent and several thousand people apply for every unfilled, $13-an-hour factory job. "The trade-off is absolutely worth it," Mayor Fischer said, arguing that while the city is actively subsidizing G.E.'s expansion here, mainly through tax rebates, that is not enough. "You must have a globally competitive wage to create jobs," the mayor insisted.

David Fuller's view Noting that this article was first published on 29th December, near the end of a year when pessimism reigned, this is one of the most encouraging items that I have seen, for three reasons:

1) It shows that the global field in terms of manufacturing costs is currently more level, when all expenses for a company such as General Electric (weekly & daily) are factored in, than at any time in living memory. In an era of globalisation, this was a prerequisite for a reversal of the long decline in manufacturing jobs in the USA.

2) The report also supports recent data indicating that US unemployment had reached a trough and begun what is hopefully a long, albeit slow, reversal in the downward trend for jobs. This is essential if the US is to avoid most of the crippling strikes and often bitter public protests experienced in some European countries last year, not to mention other regions of the globe, and commence a long-term economic recovery.

3) The story above also shows investors why we should not confuse the economy with the stock market, particularly regarding the Autonomies - successful multinational companies. The global mobility of these firms is a key reason why well managed companies will recover from a traumatic year such as 2008 more quickly then their home economies, and also hold up better during a difficult year such as 2011.

GE's share price shown above has been rangebound since mid-2009. Nevertheless, a break beneath last year's October low, which currently appears unlikely, would be required to question the outlook for higher ranging. GE's diversified businesses are in some of the most competitive sectors of the global economy but the share has a reasonable yield of 3.68%.