Economics

U.S. manufacturing output may boom, but not jobs

The WSJ:

After a 35% decline in the number of manufacturing jobs between 1998 and 2010, the tally has since risen by 489,000, or 4.3%, to 11.9 million. Most of that increase is due to the economic recovery rather than reshoring. But IHS Global Insight, an economic research firm, forecasts that the number of manufacturing jobs will climb 3.2% this year compared with a 1.6% increase in all jobs. ”We’re becoming more competitive,” says Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation, a research group in Arlington, Va. …

U.S. manufacturing has become attractive for some companies as Asian wages have surged over recent years and the wage gap between the U.S. and China has narrowed. The drop in the dollar over the past decade has also made U.S.-produced goods more competitive. And higher oil prices have increased the cost of shipping goods across oceans, making domestic manufacturing more appealing.

Still, as the piece goes on to say, the jobs being reshored are only coming back in dribs and drabs. And it may have less to do with rising U.S. competitiveness than companies embracing a “regional manufacturing” approach “where Asian plants serve Asian customers, North American ones serve Americans.”

The U.S. may well make more here at home and export more abroad, but that is not the  same thing as creating lots and lots of high-wage jobs. Tyler Cowen:

 The new export-based prosperity may not translate into higher wages for everyone, or even most people, in the United States. Skilled laborers who work with smart machines or even hold advanced managerial jobs will continue to make big gains, as the numbers have been showing for some time.  … As the number of American jobs in manufacturing has fallen dramatically, it is often forgotten that American manufacturing output has continued to rise, even during some slow times. In the past decade, the flow of goods coming from U.S. factories has gone up by a third as capital has increasingly become a greater share of input over labor.

2 thoughts on “U.S. manufacturing output may boom, but not jobs

  1. Reshoring, and/or regional manufacturing will be a boon to American manufacturing. As we have seen, events half a world away can idle production lines here.

    This need not be.

    I’m all for trade, so please don’t misunderstand my next statement. The idea of a global economy should be rejected. There is no reason to depend on anyone else anywhere else to make American products. A return to the tried-and-true concept of making our own products with enough extra capacity to trade should be considered. Manufacturing once provided a wealth of diversity in the job market for people who were smart enough for college, but preferred to work with their hands.

    We still have the world’s largest consumer market, yet we aren’t taking advantage of it. Whomever decided to force us into a service economy (which is far more succeptible to economic downturns than one based upon manufacturing) made a big mistake.

  2. “A return to the tried-and-true concept of making our own products with enough extra capacity to trade should be considered.”

    As wages fall that will become more practical. Yes, really.
    To compete, one must compete.

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