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Why an American ‘manufacturing renaissance’ wouldn’t create many manufacturing jobs

Get ready to hear a lot more about technological unemployment. The theory holds that automation, especially of the digital variety, is happening more quickly than entrepreneurs and human capital can adjust. And it’s why, says Andrew McAfee, co-author of Race Against the Machines, a boom in US manufacturing wouldn’t bring a boom in job creation:

– Manufacturing employment has been on a steady downward trend in the U.S. since 1980 (it increased some after the end of the Great Recession, but this boost appears to be leveling out).

– Manufacturing jobs have also been trending downward in Japan and Germany since at least 1990 and, as I wrote earlier, in China since 1996.

– Manufacturing employment decline is a global phenomenon. As a Bloomberg story summarized: “Some 22 million manufacturing jobs were lost globally between 1995 and 2002 as industrial output soared 30 percent. … It seems that devilish productivity is wreaking havoc with jobs both at home and abroad.”

Nor does McAfree buy the theory that even if manufacturing employment declines because of automation, the drop will be offset elsewhere in the economy. If goods can be produced more cheaply, it will free up purchasing power for other things, right?

Fair enough, but what if those other companies are also automating? One of the most striking phenomena of recent years is the encroachment of automation into tasks, skills and abilities that used to belong to people alone. As we document in Race Against the Machine, this includes driving cars, responding accurately to natural language questions, understanding and producing human speech, writing prose, reviewing documents and many others. Some combination of these will be valuable in every industry.

Previous waves of automation, like the mechanization of agriculture and the advent of electric power to factories, have not resulted in large-scale unemployment or impoverishment of the average worker. But the historical pattern isn’t giving me a lot of comfort these days, simply because we’ve never before seen automation encroach so broadly and deeply, while also improving so quickly at the same time.

7 thoughts on “Why an American ‘manufacturing renaissance’ wouldn’t create many manufacturing jobs

  1. I read Race Against The Machine and enjoyed it — and I do believe that this is a trend. Never the less, high-tech and medium-tech manufacturing make up only one-third of manufacturing. Low tech manufacturing still predominates and we have many workers with poor skills who can fill these low-tech jobs and get paid a lot better than they would in the consumer economy we have. Also, the authors fail to account for all the jobs that manufacturing has related to the manufacturing process that don’t appear on the shop floor or in the manufacturing facility itself — many engineering jobs, technician jobs, blue-collar jobs, etc., etc. Not to mention all the other sectors in our economy that are affected by the manufacturing sector — energy, transportation and logistics, computer services and applications, servicing the manufacturing plant and equipment and supply businesses, etc., etc. Manufacturing is approximately 10% of our economy and could easily be a lot more (maybe 25%) — we have a lot of capacity that has never been developed since the 1990′s (let’s invest in this infrastructure). Our military readiness depends on a home-grown manufacturing sector better than sourcing off-shore and our military needs people within their ranks (civilian and military) who have the technical know-how that comes from an emphasis on manufacturing technology (i.e., making things as opposed to selling things). And, if we manufactured more, it would improve our exports and the large deficit in our current account/trade balance (which I think is running around $525 billion this year). I could go on and on; but, you can go on to my blog: (do a Google search on) Economics Without The B.S.

  2. I forgot to mention that the agriculture industry is a good comparison in some respects to manufacturing. Farmers made up a large percentagte of the workforce in the 1800′s but have been in decline (but producing more for domestic consumption and also making a big contribution to exports) ever since. Yet, there are still a lot of jobs/industry associated with food production and distribution (domestically and export). And the scienctific sector has been a lot more involved with the agriculture industry since WWII — chemicals, feed, plant research, climate’s affect on plant management, pharmaceuticals for animals, etc.. etc. Let’s not be short-sighted when it comes to manufacturing — listening to ‘experts’ who may never have worked in a manufacturing environment.

  3. Manufacturing is old news. The new is what the Internet is doing to retail, publishing, distribution, R&D, administration… The list of threatened jobs scans the spectrum of blue, pink and white collar occupations. It’s not unusual to see engineers lost work to design centers in India, or a $14/hr warehouse job hinge on computer literacy.

    Some sectors are relatively immune to technology and offshoring. Unfortunately, the biggest are construction and govt.

  4. On fertility rates you might not remember but the extreme pessimism of the 1970s caused a fall in the fertility to its nadir of around 1.8 around 1980. After Reagan’s election something interesting happened, fertility rates began to climb. Leadership and optimism matter. Fertility rates began to decline in 2009. Leadership and optimism matter. :) I look forward to the period of 2016-2024 when a new era of leadership and optimism will cause US fertility rates to increase again.

      • No, that’s a good story, Steven. Leadership and optimism can overcome the status quo mentality we have leading this nation — poor leadership in the private sector as well as the government. A status quo mentality that does not see the benefits of a culture that makes (manufactures) things. See my blog: (Google search on) Economics Without The B.S. for more on the leadership vacuum — and pay attention to Dr. Tyson’s remarks.

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