Posted on 09/09/2016 6:29:21 AM PDT by expat_panama
America has a long-running crisis in manufacturing employment. Quite simply, year after year, the number of people employed in making things declines — the figure is down by nearly 5 million since 1996. And in election years like this one, it is common to hear politicians talk about how they will bring manufacturing jobs back.
Across the board — on both sides of the aisle, in every part of the country — there is an overwhelming desire to have more manufacturing jobs. This is partly due to nostalgia and symbolism. But it’s also driven largely by economics: Generally speaking, the manufacturing jobs that have been lost (and that remain) offer better pay, benefits, and job security than the service jobs that have replaced them. What’s more, manufacturing has a big multiplier effect — when you build machines at a factory, it calls an array of suppliers and service providers into action. Thanks to the power of manufacturing’s economic impact, states and cities are often willing to offer significant financial incentives to companies that are willing to open plants.
Now, if they were being honest, politicians would note that the vast majority of the millions of manufacturing jobs lost can’t return. They left due to globalization and competition. And many were rendered obsolete by technology. The reality is that the value and volume of stuff factories produce tends to rise each year, even if employment falls, because software, machines, and computers are doing more of the work.
However, there are at least a few hundred thousand manufacturing posts that could be “brought back” without turning back the clock on globalization and making factories less productive. All that would have to happen is for America’s companies to fill the hundreds of thousands of open positions.
I’ve written before about the strange state of affairs in the job market. Markets everywhere have become more efficient, thanks to technology and brilliant new platforms that grant buyers and sellers of goods and services the ability to meet one another online and agree on product and prices. And yet the labor market has become less efficient. As the most recent JOLTS report notes, there were some 5.6 million jobs open in the U.S. at the end of June, up from 2.4 million in June 2009. If human resources professionals could be 10 percent more effective at filling posts than they are, there would be an additional 560,000 people working today.
Last week, the Wall Street Journal noted that a decent chunk of those openings are in manufacturing. “The number of open manufacturing jobs has been rising since 2009, and this year stands at the highest level in 15 years, according to Labor Department data,” the Journal reported. “Openings for manufacturing jobs this year have averaged 353,000 a month, up from 311,000 in 2015 and 122,000 in 2009.” That’s a lot! There are 12.28 million manufacturing jobs total in the U.S., and in the past year, 39,000 have been lost.
To put it differently: If U.S. manufacturers were willing and able to fill the positions they have open, we’d be bringing manufacturing jobs back in a big way.
So why isn’t it happening? How can it be that the number of manufacturing openings has tripled in the past seven years even as millions of manufacturing workers have been forced to find other work? Well, it’s complicated. Markets may be efficient most of the time, but they’re far from perfect. It could be that there are lots of openings in geographic regions where the population has been declining. It could be that employers, who have to compete for labor in ways they haven’t had to in more than a decade — the unemployment rate is just 4.9 percent — aren’t offering enough money to lure workers away from their current jobs.
But in manufacturing, there’s something else at work. As the Journal noted, the manufacturing industry has changed a great deal in recent years. It is more technology-intensive, more specialized, and depends on higher-value-added goods. As is the case with many other professions — including journalism and retail — the jobs have evolved to the point where they are fundamentally different. It’s one thing to weld a fender to a car body; it’s quite another to program, manage, and maintain the machines and robots that do the welding. All of which is to say that the level of skills and competencies manufacturing employers are seeking in their employees may be significantly higher than the level they were seeking 10, or 20, or 30 years ago.
In most instances, especially in service industries such as retail and food service, labor shortages can be solved by the simple application of higher wages. But when it comes to manufacturing, higher wages may be only part of the solution. Sure, you can entice a skilled operator of machine tooling to walk across the street by doubling her salary. But if the market — i.e., other companies, the educational system, and training programs — hasn’t been endowing sufficient numbers of workers with those skills, higher pay will only get you so far.
The most direct way to bring back manufacturing jobs, then, may be for companies to decide that they are prepared to invest in programs or direct efforts that will produce workers with the skills they need. The solution to outsourcing production elsewhere may be to insource training.
The first manufacturing job was created to make our first tools. For a million years these jobs were never lost, shipped overseas, nor made obsolete by new technology. It was an animal-like existence where the tool making was largely programmed into people kind of like birds are programmed to make nests.
We grew out of it and almost all of those first manufacturing jobs have been lost or shipped overseas to more remote areas.
imho this has been a good move and we're better off now.
"The most direct way to bring back manufacturing jobs, then, may be for companies to decide that they are prepared to invest in programs or direct efforts that will produce workers with the skills they need. The solution to outsourcing production elsewhere may be to insource training."
Even manufacturing jobs are going high tech. Apparently we aren't keeping up training people for these jobs. Whose fault is that?
It wasn't until those most basic needs were met that the "other" occupations appeared: artist, entertainer, prostitute, blogger, etc.
From George Washington’s Tariff Act of 1789 to Republican’s Coolidge and McKinley’s prosperity thru tariffs, to Reagan’s 100% Tariff on Japanese electronics and his 25% tariff on Japanese motorcycles (saved Harley), Tariffs were the only source of Gov revenue to 1913, when the income tax replaced it.
Build a wall to keep out unskilled workers out who depress wages here, build a wall of tariffs to keep products that depress wages here.
Have the manufacturers never thought that if they move manufacturing jobs offshore, then who here will have a job to buy their stuff?.................
A company advertizes a job opening where the list of qualifications is so specialized than no one but a current employee could qualify.
No on-the-job training. Any new hire is expected to hit the ground running.
The skills are so specialized that it's not clear how you would learn them by any means other than on-the-job.
The job is short-term. Once the project is complete, the job disappears. So it's not worth learning the specialized skills on your own, anyway.
Have the manufacturers never thought that if they move manufacturing jobs offshore, then who here will have a job to buy their stuff?.................
If nobody here is buying foreign manufactured goods, then we shouldn't need any tariffs.
I was in manufacturing for 35 years. Employers went out of business or went overseas because of too much government. The EPA, government funded employee lawsuits for politically “special” people and reams and reams of paperwork you can be fined for getting wrong along with minimum wages and mandatory health car, unemployment taxes...the list is endless. Too much government means too little real employment. I recently read the US has nine million more people employed in government than in the manufacturing sector. It’s similar to guns or butter. In this case it’s government or manufacturing jobs.
To be fair, this training happened in a massive way in WW II, when huge numbers of women entered the workforce to do work they’d never dreamed they’d need to do.
“Rosie the Riveter” had a great impact on winning that war and bringing the troops back home.
Training programs work. However, in our current situation, we need to eliminate welfare and disability recipients to make this “equal.”. This would also greatly reduce government payouts.
If that were true, then we'd be seeing fewer software jobs over time, not more
Incentive on the part of investors is the first imperative in regards to job creation. What is the greatest return on investment that a new job creation will produce?
There must be more money returned to the investor than has been put into the effort of the job creation, which has to account for ALL the costs, including the physical work station, the compensation paid to the individual worker, all other benefits paid on the worker’s behalf, the costs of the maintenance and support of the work station, and a tangible profit to the enterprise when the work product is sold to the next level of consumption. This tangible profit is the incentive that keeps the investor fueled and willing to continue to invest.
Taxing this profit away, or artificially increasing the costs of creating the work product to reduce the tangible profit, is a powerful disincentive. Simple economics, up to this point.
Now somewhere, somebody else is willing to create a similar work product, and reduce the input costs, be it in the physical work station, compensation paid to the worker, other benefits paid on the worker’s behalf, and maintenance and support of the work station, which may generate a LARGER tangible profit. This is geared to the whole concept of competitive pricing of all the inputs and the work product, and the largest tangible profit wins every time. Again, simple economics.
Now this is where it gets unnecessarily complicated. Some clever thinker, who has no stake whatsoever in the economic health of the enterprise, decides this is an excellent place to apply “fairness”. “Fairness” of competition, either by subsidizing the less efficient producer, or by artificially handicapping the more efficient producer, by imposing restrictions and requirements that must be complied with to satisfy this standard of “fairness”. Application of an excessive degree of “fairness” soon results in having TWO less efficient producers, resulting in very diminished competition, followed by scarcity of availability of work product and no growth.
Further, the compensation or other benefits paid to the individual worker should not be tied to the actual productivity that worker provides to the overall enterprise, but on a “living wage” that somehow equalizes the expenses incurred by the individual with the compensation awarded for services. Only, somehow, this never works out in practice, as the worker receiving excessive compensation in relation to the productivity, soon sees the position evaporate altogether, and is now unemployed.
Conservative principles, including free enterprise capitalism, work every time they are applied. And in working, they supply an ever-growing number of benefits that are widely available to larger numbers of the entire society, as steadily declining prices. Only innovation is higher priced, and that only for a relatively short period after introduction.
Contrast this with the false economic premise of “crony capitalism”, which benefits only a small clique who are in on the scheme, and denies the benefits to much if not most of the greater society, and keeps prices artificially high.
1. Drastically overhaul business regulations so it encourages more jobs staying in the USA. Current business regulations actually end up doing the opposite.
2. We need a complete from-ground-up overhaul of national taxation. At least seriously consider the flat tax Steve Forbes proposed 20 years ago--an overhaul that cuts yearly compliance and economic opportunity costs of the income tax by 70%. All kinds of businesses--even Warren Buffett's own Berkshire Hathaway--should welcome the change, since just this change cuts the cost of running a business dramatically and encourages savings and capital formation staying in the USA.
And yet the story I have heard for years now is that jobs go unfilled because there are not enough applicants who have even the basic “soft skills”, e.g. proper attitude, ability to learn and follow instructions, and to consistently show up for work on time.
they want 10 years experience for a technique that is 2 years old.
dilbert lives.
Throw out the corporate income tax and watch America’s industry return and grow!
Do a little research before making preposterous claims. Tariffs in 1912 comprised about one third of federal revenues, not 100%. Anybody with a room temp IQ would at least recall the existence of federal excise taxes in that era.
I’m certain that all the illegal immigrants who barely speak English can be taught all the skills required for the more demanding manufacturing jobs. >s
“Do a little research before making preposterous claims. Tariffs in 1912 comprised about one third of federal revenues, not 100%. Anybody with a room temp IQ would at least recall the existence of federal excise taxes in that era.”
1913 $318.8 44.0%
44% almost half.
Today it’s about as close to zero as you can get.
“Tariffs were the largest (approaching 95% at times) source of federal revenue until the Federal income tax began after 1913. For well over a century the federal government was largely financed by tariffs averaging about 20% on foreign imports. There are no tariffs for imports or shipments from other states. “
More tariffs, less income tax, more production, more jobs.
Trade cannot be entirely cut off. But the current system is completely out of whack. Canada and the US have had a successful deal for years in the auto sector, where cars can be shipped across border without tarriffs, because the work is shared. Even the Japanese and Korean manufacturers have set up assembly plants in Canada and the US to get around tarriffs. The same thing needs to happen with other goods. It’s insane that some industries are now almost 100% outsourced to other countries. Try finding clothing or a small appliance (microwave, toaster, can opener, mixer) that’s actually made in North America.
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