Even if manufacturing may be coming back … manufacturing JOBS, not so much.

Interesting analysis from Nate Silver’s  535.com titled Manufacturing Jobs Are Never Coming Back

There’s no mystery why candidates love to focus on manufacturing and trade.

“It’s understandable that voters are angry about trade. The U.S. has lost more than 4.5 million manufacturing jobs since NAFTA took effect in 1994. And, there’s mounting evidence that U.S. trade policy, particularly with China, has caused lasting harm to many American workers.”

“Manufacturing in particular embodies something that seems to be disappearing in today’s economy: jobs with decent pay and benefits available to workers without a college degree. The average factory worker earns more than $25 an hour before overtime; the typical retail worker makes less than $18 an hour.”

“In 1994 there were 3.5 million more Americans working in manufacturing than in retail. Today, those numbers have almost exactly reversed, and the gap is widening. More than 80 percent of all private jobs are now in the service sector.”

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How can that be?  Aren’t we hearing a lot about “re-shoring” and foreign capital investing in U.S. based manufacturing plants?

 

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Well, kinda.

But, there’s a big difference between manufacturing plants and “output” … and manufacturing jobs.

According to the 535 analysis …

“Since the recession ended in 2009, manufacturing output — the value of all the goods that U.S. factories produce, adjusted for inflation — has risen by more than 20 percent.

But manufacturing employment is up just 5 percent. (And, much of that is due to the bounceback from the recession.)

The factories being build here are heavily automated, employing a small fraction of the workers they would have a generation ago.”

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Again, there’s a big difference between manufacturing plants and “output” … and manufacturing jobs.

Good point.

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Ken’s partial fix:

Rather than the usual bromide of just cutting corporate taxes across-the-board, why not offer employers a double tax deduction for workers’ wages earned in the U.S.  … up to the FICA ceiling?

Think about it ….

Reduces the cost of labor (a bit), shines a light on employment, and only rewards companies that generate income (and pay taxes) here in the U.S.

#HomaFiles

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2 Responses to “Even if manufacturing may be coming back … manufacturing JOBS, not so much.”

  1. John Carpenter Says:

    i am a little surprised that your solution for the lack of manufacturing jobs is to have the government manufacture jobs. The base problem, automation and the replacement of workers with capital, is not going to go away. We need to prepare our workforce for that inevitability. I would imagine a more comprehensive solution would be to open up training and educational opportunities for displaced workers and their kids. How that is done is a big question but it is the real answer.

  2. Bernardo Cabrera Y Zárate Says:

    More tax distortions through credits for employment will not help.

    Unfortunately, people will have to prepare for jobs that are more expensive to automate or offshore.

    Just make doing business easier and cheaper across the board (lower taxes and less regulation).

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