Manufacturing Jobs in US / The debate

In 1953 manufacturing accounted for 28 percent of U.S. gross domestic product, according to the U.S. Bureau of Economic Analysis. By 1980 that had dropped to 20 percent, and it reached 12 percent in 2012. Over that time, U.S. GDP increased from $2.6 trillion to $15.5 trillion, which means that absolute manufacturing output more than tripled in 60 years. Those goods were produced by fewer people. According to the Bureau of Labor Statistics, the number of employees in manufacturing was 16 million in 1953 (about a third of total nonfarm employment), 19 million in 1980 (about a fifth of nonfarm employment), and 12 million in 2012 (about a tenth of nonfarm employment).

Service industries—hotels, hospitals, media, and accounting—have taken up the slack. Even much of the value generated by U.S. manufacturing involves service work—about a third of the total. More than half of all people still employed in the U.S. manufacturing sector work in such services as management, technical support, and sales…

That leaves the service industries to generate jobs and the government to retrain workers. According to MIT’s David Autor, for every dollar spent by the federal government on retraining workers and helping them find jobs after they lost theirs to trade competition, the U.S. spends about $400 on Social Security and disability payments for those who exit the workforce rather than seek new work. Retraining programs have a mixed record, but improvement is possible. The German government has had considerable success in this area.

Germany also embraces stronger union rights and collective bargaining, which help raise wages across industries. In the U.S., minimum-wage hikes are one obvious tool to increase the number of people earning middle-class incomes. Another approach might be rebalancing taxes on employers, wages, and investment. Income taxes are higher than capital gains taxes that favor investors.

The crisis of unemployment and inequality demands a serious response. It is not a problem that a few high-tech manufacturing jobs can fix—however fancy the hubs are.

Chosen excerpts by Job Market Monitor. Read the whole story at Manufacturing Jobs May Not Be Cure for Unemployment, Inequality – Businessweek.

The Reply

Last week, BloombergBusinessweek ran an article entitled “Factory Jobs Are Gone. Get Over It” by guest columnist, Charles Kenny. Even the title of the piece seemed to us to be pejorative, and we feel that a much more honest assessment of the continued imperative for a robust American manufacturing sector is owed to American workers.

No reputable economist disputes the very positive economic and social multiplier effects of manufacturing jobs versus the service jobs available on average today, especially jobs in leisure & hospitality and health care and social assistance where most new service jobs have been created over the last twenty years. Mr. Kenny decried factory jobs for their lack of ‘awesomeness’, and yet the three of us know very few workers — both entry-level and more advanced — who wouldn’t much prefer safe factory jobs over low-paying hotel and health services jobs…

Right now, with the U.S. manufacturing sector employing less than 10 percent of the U.S. civilian labor force, the sector is not even half the size it needs to be for our nation to again have a balanced, high-growth economy. It’s actually far more important that policy makers focus on our manufactured goods trade deficit, with its myriad adverse economic, social and defense implications, than on the more nuanced federal deficit.

In our careers, the three of us have all worked producing things, and millions of our brothers and sisters still do so every day across the country. We should never demean their work, and as a diverse nation of 316 million people we absolutely can’t prosper without it.

Chosen excerpts by Job Market Monitor. Read the whole story at Manufacturing Jobs Remain an Imperative — And We Still Need Millions More | Leo Hindery, Jr..

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