Continuing on a theme we broached in our previous post about jobs, unemployment and rising productivity in the U.S., we’ll look today at some comments put forth by David Wessel in a recent article for the Wall Street Journal (January 12th, p. A6, “The Factory Floor Has a Ceiling on Job Creation”).
Wessel points out that despite the recent good news about upticks in manufacturing employment (a third of a million more people on factory payrolls in the past two years), that increase follows a decline of 2.3 million jobs the two years before that. In other words, only two million more jobs to go…
That’s not likely to happen. Even if manufacturing doubled its current national headcount, it still wouldn’t put all the unemployed back to work.
Manufacturing payrolls today account for about 9% of allU.S.jobs. As we noted in our prior post, in the course of a century, agriculture went from employing 41% of our population, to 2% today. Manufacturing payrolls are on a similar decline, and have been for the past 30 years. The long term trends toward technological improvements are not going to end. If anything, I think they’re likely to accelerate.
It’s not that manufacturing itself is withering though. Factory output continues, in fits and starts, to climb, while payrolls decline. Output per worker is generally up by extraordinary measures. The increase in productivity ironically portends a decrease in jobs as American factories are able to produce more goods with fewer people.
On the upside for those employed there, this productivity increase does allow companies to “boost wages while enjoying rising profits at the same time,” according to Wessel.
Good news is heralded by the fact that U.S. manufacturing may do pretty well in the decade ahead, particularly as the Chinese cost advantage over the U.S. narrows. Even as companies expand production abroad, most report that they will “maintain production in highly efficient U.S. plants to meet domestic demand.”
Ron Bloom, the recent U.S. manufacturing czar points out a compelling observation: “If you get an auto-assembly plant [here in the U.S.], Wal-Mart follows. If you get a Wal-Mart, an auto-assembly plant doesn’t follow.”
Finally, today’s manufacturing jobs require more brain power than ever before, and more computer know-how. They often pay well as a result, and tend to be more secure jobs. When production migrates abroad, R&D and the brain trust often do as well (as we’ve pointed out in earlier blog posts). Manufacturing employment growth in the U.S. helps to stem that tide. But given the demands of the modern factory, this kind of work will no longer be “the ticket” for masses of unskilled, middle-class shop floor workers. Tomorrow’s factory job will require levels of intelligence and training beyond anything before.
As Wessel concludes in his article: “Pretending otherwise is foolish.”