Manufacturing is dying. Manufacturing is leading the recovery. Manufacturing jobs will disappear. Depending upon your news source, you have heard one or all of these proclamations. I didn’t come to bury mainstream media outlets, but to praise a few sources about manufacturing jobs I’ve been copying into Evernote. These sources include Martin Ford (econfuture.wordpress.com blog and author of “The Lights in the Tunnel”) and Andrew McAfee (professor, blogger at AndrewMcafeesBlog, and co-author with Erik Brynjolfsson of “Race Against the Machine”).
If you look at manufacturing production, the long-term slope is positive. Indeed, the economic value of manufacturing is the backbone of the economy. Meanwhile, jobs in manufacturing have declined over several decades. Why is this? McAfee says in a recent blog post, “The conventional explanation for this phenomenon—and the one I believe—is productivity growth. American manufacturing value added was rising, while American manufacturing employment was falling for a long time before 2007. In fact, both have been going on since the early 1980s, with remarkable steadiness.”
Martin Ford made the point in his book that automation was replacing all the jobs. In fact, he was quite pessimistic about the future of society if there were almost no jobs. Brynjolfsson and McAfee also analyze the employment situation in their book and spend the first few chapters in a rather depressing projection of employment. Personally, I have made an observation for many years (not based on facts) that manufacturing must surely parallel agriculture. American agriculture is still a fundamental part of our economy—and of our quality of life. Employment in agriculture has dropped for well over a century.
It’s not so much the number of jobs, but the type of jobs that matter. Throughout the ‘50s and ‘60s, a family could live a middle-class lifestyle on the income of a single, unskilled factory worker. I saw that change dramatically in the 80s, partly due to national politics that reduced the effective use of the power to strike by unions. Soon, it took two factory workers in a family to bring home enough income to live a middle-class lifestyle. Today, two such incomes of unskilled factory workers would make the family just barely middle class.
The question for me is what is to become of unskilled labor? Take a look at some comments from McAfee’s latest blog: “You didn’t need a high school diploma.” “You just needed to be a hard worker, and you needed to show up every day, because it wasn’t easy work.” “The skills I had weren’t really applicable.”
Part of the answer is to provide more and better education to more of our population. There are millions of jobs that require some sort of technical education. It may not always require a university degree, but it will require something beyond basic high school work. Let’s make more unskilled people skilled people.
What I like about “The Race Against the Machine” is that the authors do not end in pessimism. They offer what they call the “tip of the iceberg” of prescriptions. Here’s my summary of the top of the tip of the ideas:
· Invest in education.
· Teach entrepreneurship as a skill.
· Lower government barriers to business creation.
· Invest to upgrade the country’s communications and transportation infrastructure.
· Increase funding for basic research.
· Decouple benefits from jobs to increase flexibility and dynamism.
· Reform patent system.
I’m with them. We can all help with several of these