The Industrial Revolution Continues Apace, Just Without Workers This Time Around

Nick Gillespie | September 4, 2007

Where have all the good manufacturing jobs in the U.S. gone? Into better production technology:

The United States makes more manufactured goods today than at any time in history, as measured by the dollar value of production adjusted for inflation -- three times as much as in the mid-1950s, the supposed heyday of American industry. Between 1977 and 2005, the value of American manufacturing swelled from $1.3 trillion to an all-time record $4.5 trillion, according to the Bureau of Economic Analysis.

With less than 5 percent of the world's population, the United States is responsible for almost one-fourth of global manufacturing, a share that has changed little in decades. The United States is the largest manufacturing economy by far. Japan, the only serious rival for that title, has been losing ground. China has been growing but represents only about one-tenth of world manufacturing.

And here's a good development (at least for those of us who have ever worked on an assembly line):

While American manufacturing is not declining, manufacturing employment has been shrinking dramatically. After peaking in 1979 at 19 million workers, the American manufacturing workforce has since dropped to 14 million, the lowest number since 1950.

More here, via the Wash Post.

Hat Tip: Film critic extraordinaire Alan Vanneman.

Comments

|9.4.07 @ 8:37AM|#

And here's a good development...

You know this will be spun as a bad development by the populists / network economic cranks, despite the rather obvious correlation between worker productivity and salaries.

I'm sure they will also point out the ominous growth of China's manufacturing sector.

|9.4.07 @ 9:24AM|#

You know this will be spun as a bad development by the populists / network economic cranks, despite the rather obvious correlation between worker productivity and salaries.

No doubt. Case in point is a recent study reported in the newspaper that shows that the majority of new jobs in California pay in the upper two earning quintiles.

If you don't want to click on the PDF to see the numbers, the bar graph is titled "Share of California's job growth by earnings quintiles, 1979-2005" and the numbers from lowest earning quintile to highest are 26.9%, 6%, 14%, 25%, and 28.1%.

Here are some possible headlines:

"Majority of new jobs at upper end of earnings spectrum"

"Growth in higher earning jobs double that of lower earning jobs"

"Only 6.9% of workers earning less"

"Most doing better; some left behind"

"Middle-wage jobs declining in California as disparity grows"

After what I am sure was a considered and intelligent debate in the editorial room, or more likely exactly the opposite, which do you think they went with?

|9.4.07 @ 10:06AM|#

Yes, Nick, I'm sure the people who can't find jobs are gleeful to avoid the drudgery.

|9.4.07 @ 10:21AM|#

"They tok r joobbbsss!"

|9.4.07 @ 10:44AM|#

Give 'em a job yourself, joe. Go ahead, hire a personal elevator operator.

|9.4.07 @ 10:46AM|#

How is that supposed to be a rejoinder, Fink?

I don't own a business, so therefore, I'm not allowed to consider unemployment and declining wages in certain areas to be a bad thing?

Is this some sort of uber-capitalist take on the chickenhawk argument?

|9.4.07 @ 11:24AM|#

joe,

I don't believe that unemployment is up.
I believe we have a labor shortage in the US.
The illegal immigration being driven by the need for workers.

Can you frame your concern more precisely so that I can understand who you are worried about? There is plenty of drudgery in non-factory labor.

|9.4.07 @ 11:44AM|#

MikeP, the new crackdown on illegal immigrants will push all those low paying jobs into the gray/black market, and they'll stop showing up on statistical charts. Maybe the paper will be happy then.

|9.4.07 @ 11:44AM|#

I dunno joe, I think my wife likes the idea that she can have a life and work outside the house, since we now have so many inexpensive appliances that replaced a day's worth of the avergae woman's domestic labor. You'd think a good liberal like you would hail the marvels of technology that allow people to live more fulfilling and productive lives.

Maybe they could, you know, get some job skills that don't depend on any one company for a job. Go get a college degree, learn a trade or something.

Nah. Better to curse the darkness.

|9.4.07 @ 12:03PM|#

Since the first Univac machine was shipped, it has been obvious that unskilled labor would be replaced by machines; it was obvious when jackhammers replaced hammer-and-pike drillers in the mines.

I will grant that going to school - even a trade school - to learn skills is demanding and requires taking a long view. However, if you won't make the effort to learn, you are going to wind up with the minimum wage or no job at all.

No amount of slamming greedy corporations for not paying unskilled laborers $20/hr is going to make such jobs appear.

Invest in yourself or get left behind.

|9.4.07 @ 12:06PM|#

Neu Mejican,

I'm talking about local labor-market conditions in the rust belt, not national employment rates; and I'm talking about the longer-term effects, not unemployment going down over the past year.

JW,

Is this the 1950s? Do you think that the appliances that reduced the need for domestic labor were created in the past 20 years? If you wanted to take a serious look, instead of getting off a zinger, you might notice that the amount of time spent on domestic work hasn't budged during the the period of severe deline in manufacturing employment in this country.

Anyway, I'm sure those people who, gosh darnit, just aren't as smart and hardworking as you could really use your advice, what with you being so much better than them and all.

|9.4.07 @ 12:26PM|#

What makes you think people in traditional manufacturing areas are less willing to "invest in themselves" than people in other areas, anyway?

|9.4.07 @ 12:29PM|#

joe,

Thanks for the clarification.

|9.4.07 @ 1:11PM|#

Obviously, many of those in traditional manufacturing jobs are "investing in themselves" - learning skilled trades, etc. From the shortage of skilled labor, we need even more of them to do so.

My point was that those who do not learn skills are ultimately going to be replaced by machines. [There are already robotic lawnmowers - primitive and expensive - but they will get better and cheaper.]

Even "traditional manufacturing jobs" are not necessarily unskilled but the skilled workers will likely to be able to find other, well paying employment.

It is those who refuse to learn new skills that are going to be jobless.

|9.4.07 @ 2:13PM|#

Is this the 1950s? Do you think that the appliances that reduced the need for domestic labor were created in the past 20 years?

I think you know the answer to that one.

I'm giving you a concrete example of how technological change isn't necessarily a bad thing. It usually isn't.

Instead of bitching about how technology has replaced certain no/low skill jobs, why not just accept the reality that this has and always will happen and that re-training is in the best interest of those displaced by the technology.

|9.4.07 @ 2:16PM|#

What makes you think people in traditional manufacturing areas are less willing to "invest in themselves" than people in other areas, anyway?

The people who "invest in themselves" in manufacturing areas aren't unemployed. There is a HUGE shortage of skilled trades in North America (welders, carpenders, metal workers, etc.). Here in Canada, the government is even running propoganda to encourage people to give up white collar jobs and take up skilled trades because the shortage of skilled blue collar workers is harming the economy. The people in the skilled trades are making a pantload of money.

The people who are suffering from the loss of manufacturing jobs are the *UNSKILLED* workers. These are workers who are either unwilling or unable to get training.

It is the reality of the 21st century that jobs that don't require skills, will be sent to other countries with cheaper labor, or replaced by machine if they can't be sent over seas. If you are arguing that we need to give displaced workers free training for other more in-demand jobs, maybe you have a point. But if you are arguing if the poor and unemployed would be better off if we kept a 1950s style economy, you would be wrong.

|9.4.07 @ 2:16PM|#

The first paragraph was supposed to be quoted.

|9.4.07 @ 3:52PM|#

Aresen,

If thousands of jobs in manufacturing industries leave a region, it's going to suffer economic dislocation, whether the people there are "investing in themselves" or not. That is a harm, one that needs to be accounted for in one way or another in any political philosophy.

There are many different, legitimate stances one could take on the issue. And here's a good development (at least for those of us who have ever worked on an assembly line):

While American manufacturing is not declining, manufacturing employment has been shrinking dramatically. After peaking in 1979 at 19 million workers, the American manufacturing workforce has since dropped to 14 million, the lowest number since 1950. is not among them.

JW,

I didn't write a single word against technological progress, and I agree that retraining is a good idea. What I objected to was your indefensible assertion that I plainly object to technological and material progress, because I think that massive job loss is a bad thing.

|9.4.07 @ 3:54PM|#

Rex,

You don't know what you're talking about. When large industries relocate, the entire regional economy suffers. Everyone, including the most skilled workers, face economic dislocation. There simply isn't the wealth coming into the region to support as much employment.

And where did you get this idea that losing a job, scrambling around to find another one, and maybe relocating is a cost-free transaction?

T|9.4.07 @ 4:32PM|#

When large industries relocate, the entire regional economy suffers. Everyone, including the most skilled workers, face economic dislocation. There simply isn't the wealth coming into the region to support as much employment.

Well, joe, I'm curious. What exactly is your solution to this? Do we forbid companies from ever moving or consolidating operations? Do we guarantee jobs to everyone? What should we, as voters, be demanding our government do? I'm curious to hear a solution that wouldn't be worse than the problem.

My company got bought out last year. The corporate headquarters was moved from St. Louis to Houston. Every single employee was offered a job in Houston. Quite a few declined. Should I feel sorry for the people who stayed and don't have jobs now?

where did you get this idea that losing a job, scrambling around to find another one, and maybe relocating is a cost-free transaction?

Nobody said it was. Why anyone else should bear these costs is the real question.

|9.4.07 @ 4:52PM|#

You don't know what you're talking about. When large industries relocate, the entire regional economy suffers. Everyone, including the most skilled workers, face economic dislocation. There simply isn't the wealth coming into the region to support as much employment.

OK, so when factories shut down, it causes immediate problems. OK, brilliant.

Are you implying that with socialism or protectionism, things would be any different?

|9.4.07 @ 4:56PM|#

T,

I endorse a two-tier approach. On the individual and family level, there need to be efforts to help people get through the tough times while they make the transition. On the regional/national level, there need to be policies to help more innnovative, younger industries get a foothold in those areas where the rusty, mature industries are in decline. In Massachusetts, this happens pretty much by itself, because we've always beenn in the forefront of the innovation economy. We're a leaky bucket that's always being refilled.

But when we're talking about the real rust belt - upstate New York, the upper midwest - there need to be more aggressive efforts to make those areas more attractive for that kind of investment. One of the initiatives I really like in this area is investment in community colleges.

|9.4.07 @ 5:01PM|#

T,

There is always going to be a certain amount of churning and localized initiatives that go against the grain. What I'm talking about isn't one company going belly-up, but an entire region in serious economic decline because of changes in the economy.

Rex,

I am stating that with a safety net for the unfortunate, training and education to help them make a major transition, and public investment in making declining areas more attractive for investment, people can get through the tough times and have more opportunities, and newer industries can be encouraged to move in and expand, thereby reversing the decline or at least softening the landing.

|9.4.07 @ 5:05PM|#

I didn't write a single word against technological progress, and I agree that retraining is a good idea. What I objected to was your indefensible assertion that I plainly object to technological and material progress, because I think that massive job loss is a bad thing.

Bold talk there. I think massive job loss is a bad thing too. Great minds, eh?

If you are bitching about job losses in one sector of the econmomy due to technolocal progress, with no gross net loss of jobs overall, then yes, it's quite defensible. I accept the premise of creative destruction as a truism and don't lose a lot of sleep over it.

I don't weep for the buggy-whip makers, the 35mm film producers nor the typwewriter repairman. It sucks to be out of a job, but it sucks even more to rob progress to prevent sector-based job losses.

|9.4.07 @ 5:12PM|#

I also think that the original point of the article is fantastic news. Obviously, we have a difference of opinion.

You want an idea of what it looks like when the warning signs of change are ignored and there is actual effort made to defer change, just take a look at Detroit. It didn't happen by accident and there is plenty of blame to go around.

|9.4.07 @ 5:35PM|#

joe

Since your first comment (10:06 AM) seems specifically to deal with the individuals, that is the context that I spoke in.

As for the broader context: Yes, there are impacts beyond the company itself that affect the local economy and other workers not directly employed.

For the individuals involved, they really do have to take some responsibility for being aware of what is going on around them. There are costs of relocating and finding new employment. Although many companies do provide assistance in this respect, the responsibilty ultimately lies with the individual.

For the communities, there are obvious problems. One industry towns - such as forest communities - are particularly vulnerable. But if there is no industry that would be viable in the community, why invest resources trying to keep it going?

FWIW, the Government of Canada and Government of Nova Scotia spent C$2 billion over 40 years trying to keep the coal mines in Sydney NS going after they had ceased to be viable. This was done in the name of "keeping the community viable". They finally gave up in the 1990s, but not before many miners had been killed in accidents. The long prop-up ultimately did nothing except delay the adjustment which had to be done and forestall the redirection of resources into economically viable pursuits. For the workers, they spent years in jobs that had no future (many of them started in the mines even after this was obvious) and the incentives given to them encouraged staying, not learning new skills and moving elsewhere. The 'intervention' made things worse, not better.

There are obvious problems for individuals and communities, but unless you are aiming for a planned economy, there is not much that can be done.

I recognize that some people lack the foresight to prepare for the end of their current jobs and some communities may not be viable without the local industry, but why should resources be wasted trying to keep those industries and communities going? Alternatively, why should others (i.e taxpayers) have to pay the cost of that?

|9.4.07 @ 5:56PM|#

Aresen's example reminded me of a story I heard a few years ago. Many Portuguese fishermen were having financial troubles due to declining fish stocks from overfishing off of Cape Cod and in the Grand Banks.

Their boats were falling into disrepair as a result. What was the Portuguese govts response? Retraining? Cheap money for college?

Nope. They fixed up their boats for them. Afterwards, for some odd reason, the overfishing situation didn't improve.

|9.4.07 @ 5:59PM|#

JW,

What about false dilemmas? Do you weep for them?

I know you can't imagine any response to economic dislocation that isn't either protectionism or socialism. That's why you're not a liberal.

Keeping dying industries going is exactly the opposite of the policies I support.

BTW, I see this phrase "creative destruction" thrown around a lot by people looking to justify not caring about the damage done by economic dislocation. Do you know what people who work around actual destruction do, JW? They wear hard hats. Because it just makes sense.

|9.4.07 @ 6:00PM|#

Oops, I meant Aresen.

JW,

What you just described was welfare, and the subsidization of declining industries. That's exactly the opposite of what I'm arguing for.

|9.4.07 @ 6:12PM|#

Keeping dying industries going is exactly the opposite of the policies I support.

That's swell joe. How's that Rural Electrification Project coming? Any projected end time to that yet?

All these really neat ideas of yours sound really cool until the time comes to pay the piper. Or end them. Or make them show cost effectiveness.

I came from a background where I was surrounded by blue collar types and not a whole lot of people going off to college. I could have easily taken the low road, but instead, I went to college. I paid for it myself with loans and a scholarship or two and worked the entire time. I got my Masters because the undergrad degree wasn't worth much any more. I got a job that paid for part of the tuition and borrowed the rest. I even changed career plans mid-field and switched studies. That has paid off nicely and I'm enjoying a certain amount of success.

And you know what? I'm still paying those loans off. I didn't ask anyone else to pay for my education. Ever.

You didn't invest in yourself in all these years, even with the warning signs screaming in your face, but now you want me to do it for you?

Tough shit, pal.

|9.4.07 @ 6:19PM|#

And by mid-field, I mean in my mid-30's, with kids. Don't tell me it's too hard or can't be done because [insert sob story here].

What you just described was welfare, and the subsidization of declining industries. That's exactly the opposite of what I'm arguing for.

That's fine, but how many programs do you know of that stay within the scope of their design and never, as they say, creep? Lobbyists and ear marks don't exist on your planet?

Cripes joe, you know nothing ever gets smaller or goes away. They just re-purpose it.

Yeah, yeah, I know, that doesn't bother you.

|9.4.07 @ 6:36PM|#

joe

What you just described was welfare, and the subsidization of declining industries. That's exactly the opposite of what I'm arguing for.

No politician ever has had the guts to say "your industry is dying and your community is not viable". The "successful" rescues are few and far between and have always come at a huge cost to the taxpayer. (Actually, the "unsuccessful" rescues also have come at a huge cost to the taxpayer.)

In the example I cited, the only reason that they finally pulled the plug was yet another disaster in which a large number of miners died.

Further, you are omitting the fact that diversion of the resources to the rescues necessarily means that those resources are not being used where they would be most productive.

|9.4.07 @ 6:44PM|#

With less than 5 percent of the world's population, the United States is responsible for almost one-fourth of global manufacturing

Gosh, that kinda tracks our CO2 emissions/energy usage stats. Who'd a thunk it?

|9.4.07 @ 6:48PM|#

I know you can't imagine any response to economic dislocation that isn't either protectionism or socialism.

?

There's also corporatism, cronyism, vote-buying, and 'lets-pretent-this-isn't-welfareism'.

|9.4.07 @ 7:22PM|#

I was gonna respond to joe's posts, but JW and Aresen beat me to it. Great job, guys!

|9.4.07 @ 10:31PM|#

Thanks prole. I left a couple details out in my hurry to get out the office door.

Other things I did to invest in my future:

- Got a 2nd Bachelors, this time law-related
- I left a comfy, could-stay-there-for-the-rest-of-my-life grocery store job, union natch (and with a good chunk of seniority), and took a 33% pay cut to move to a law firm office job that was a start of something new. That was a rough time; some months I wasn't sure about paying the rent.
- Found out that no, I don't want to be a lawyer after all. Dear GOD what a boring profession.
- Sold my beloved motorcycle and used the money to buy my first computer in order to learn about them. IT is Plan C.
- Bugged the IT Director at the firm for a job. Got one on the help desk with a freak for a boss. Everyone thought I was nuts going to the "service" side of the firm.
- Waited for a job on the network side and lunged for it to get away from the nightmare help desk boss, only to get a new, but different, nightmare of a boss.

So don't tell me that we need a freaking program for people to do something else for a living. Invest in yourself with your own money, hard work and sacrifice. Be smart about it and it pays off.

Waiting for guvmint handout to do it isn't self-investment, it's welfare.

|9.5.07 @ 1:40AM|#

JW,

Just to nitpick, because I agree with the overall point to your story (invest in yourself), but how many of those scholarships, colleges, training programs etc... were subsidized by the larger community? How many of the loans guaranteed by the government?

And when I say subsidized I mean to include in the formula things like paying for the school's infrastructure, land grants, tax supported operational support, etc...

You are the person that the community is hoping will take advantage of the opportunities that joe is talking about (if I understand him correctly), but you didn't do all your learning with a library card on your spare time (oh wait, that is community supported too..., bad example).

Anyway, motivated individuals succeed when provided with an environment conducive to success. Providing that environment takes collective action at some level.

|9.5.07 @ 7:48AM|#

Nue-

Both of the scholarships were private scholarships and I took out unsubsidized loans as along as I was able to do so. At some point in the process, the feds took over student loans and *only* subsidized loans were available. Just as I have to drive on the public roads to get somewhere, I had to take those loans out to finish my education.

As to the "community," I am part of the larger society and co-mingling of resources is unavoidable. (I'm helped out by countless number of people each day as they do their jobs in their own self-interest. That's how market economies work and there is nothing strange about that.) I don't think you will ever get any libertarian saying that using the commons is something that is wrong. Talk to the anarchists and you'll get a different answer perhaps.

That's not what I'm talking about, however. Direct assitance, either through a jobs program or outright grants, is my meaning of a "handout."

Getting a high school diploma and drinking beer with your buddies after work or on the weekends and buying a new trawling engine for fishing is not an "investment." I worked with plenty of these guys, as I'm sure many of us have, and they're probably still at it.

I saw the dead-end of the grocery store job staring me straight in the face for many years. If that's what you want to do for the rest of your life, go nuts. I understand that not everyone is driven to improve their lot in life and that's fine with me. Just don't come whining to me if and when the gravy train stops and you're flat on your ass because you have no marketable skills and did nothing to change that.

Get up and do something about it.

|9.5.07 @ 10:44AM|#

JW,

Like I said, I agree with your overall point. But how is participating in a "jobs program" or taking an "outright grant" different than your story? The community gets something back for that investment in the individuals motivated enough to get the training. Individuals need to invest in themselves, but communities also need to invest in themselves on a larger scale. A community that provides job programs and outright grants to those that have lost jobs in a dying industry will outperform communities that do not. Why would you be opposed to this kind of action by the community. It seems exactly the kind of activity that governments should be participating in.

|9.5.07 @ 11:32AM|#

Nue,

Actually, it's the sort of thing govts should not be participating in (see Ron Bailey's post about Reich--same thing at work). These programs can become politicized and open to inept micromanaging. Which jobs will they be retrained for? How many trainees per job? Are they actualy learning anything? Are these just make-work jobs? What happens when people take that tax-paid training and leave the "community?" DC has city-run training programs that produce very little, from all outward signs.

I've long subscribed to the notion that it's the act itself of self-help and bootstrapping that transfers the lessons needed to succeed in life. Handing a check over to someone or giving people an extra check box on their unemployment form for "training" doesn't provide those lessons.

The commmunity I want to live in isn't one that hitches its wagon to a single industry and then mopes around when the economy or technology changes and the factory closes. I don't want my "community" to be paternalistic and all providing.

What can the community do? Sponsor a job fair. Provide short-term assistance for those truly desparate. Lower taxes to attract businesses into the area. Heck, if you want, provide low-cost education loans that are to be *paid back.*

Provide the tools, not the means. Those that really want to change will do so. Those that don't, well, you'll see them on a monthly basis anyway.

Steven Capozzola|9.17.07 @ 11:21AM|#

The bottom line is JOBS. The U.S. lost 46,000 manufacturing jobs in August 2007. More significantly, the ongoing losses are taking a cumulative toll on communities throughout the country. We need to adequately enforce our trade laws, and hold countries like China accountable for illegal trading practices such as currency manipulation. Otherwise, we'll continue to shed manufacturing jobs.