The manufacturing jobs delusion

History suggests that the aim of creating large numbers of manufacturing jobs will be a lost cause. In 1979, the high point for American manufacturing jobs was reached at 19.5m. The subsequent recession of the early 1980s caused that number to fall but there were regularly 17m-18m jobs in the 1980s and 1990s. From the turn of the millennium, however, the total fell pretty remorselessly, with the 2008-09 recession proving the coup de grace. The low was just under 11.5m in early 2010. As the economy recovered, some jobs returned and a peak of 12.3m was reached early last year. But since then, the numbers have been drifting down again.

The same kind of declines have been seen across the developed world, indicating that this is not a particular problem of American economic policy. This report from the Congressional Research Service sets the context; America's share of global manufacturing value added fell 12 percentage points between 1993 and 2014 but Japan's share fell 14 points over the same period. Unsurprisingly, China has taken the bulk of the market share. In terms of employment, the 31% decline in America between 1990 and 2014 compared with a 25% fall in Germany, 33% declines in France and Sweden, 34% in Japan and 49% in the UK.

Actually, America makes more than ever. Still, Wharton management professor Ann Harrison says the plight of workers caught in a changing economy cannot be ignored. “If a manufacturing worker moves to work in the service sector, that worker’s wage actually does fall,” she notes. “Wages can fall 20%, so there is a wage premium attached to a manufacturing job. It is true that these jobs are in some sense good jobs, and I understand why a lot of workers hurt by trade would want their jobs back.” The sentiment is real, and some people have been hurt by trade, and that is why Trump’s message resonates with them, Harrison adds. “Having said that, the simple solution of trying to stop trade will not work — the ship has already sailed. So to try to bring those jobs back through tariffs is going to actually make things worse.”

No one “stole” America’s jobs, of course. Many companies moved them overseas, simultaneously increasing profits and reducing the price of products for the American consumer. Bringing back jobs would generally result in higher prices, which would have other implications for the economy as a whole. “The basic question is, why have these manufacturing jobs left the U.S., and what would be the real cost of bringing them back? And I think the answer is that it’s going to be very high,” says Wharton emeritus professor of management Stephen J. Kobrin. “Some surveys say some people are willing to pay more for products that are in made in the U.S. But how much more — 5%, 10%?”

silvermani wrote:Very soon robots will take over most of the manufacturing jobs and food stamp usage will shoot up even higher.

MaxEntropy_Man wrote:

silvermani wrote:Very soon robots will take over most of the manufacturing jobs and food stamp usage will shoot up even higher.

https://en.m.wikipedia.org/wiki/Guaranteed_minimum_income

silvermani wrote:Very soon robots will take over most of the manufacturing jobs and food stamp usage will shoot up even higher.