Tuesday, September 13, 2011

Why We (Should) Care About Manufacturing

By: Stephanie Allen, Project Associate. 

If economic development were high school, manufacturing would have no shot at being homecoming queen. Manufacturing is that plain girl who’s neither popular nor unpopular, neither brilliant nor dumb; you’ve sat next to her for years, but never noticed her. Manufacturing is the kind of girl whose dwindling attendance is likely to go unnoticed, and when it is noticed it’s likely to be countered with rationalizations like maybe we’re better off with fewer girls like her—we should be focusing on attracting smarter, prettier, and more talented girls. 

That seems to be the sentiment about the dwindling number of manufacturing jobs in the U.S. Once 36 percent of U.S. total employment, manufacturing has fallen to just 11 percent. And, though it is higher than 2009 lows, manufacturing employment today is nowhere near a pre-recession levels. There’s a sense that we don’t need manufacturing; we want higher-paying, higher-skilled jobs for our communities. Targeting manufacturing jobs is pass√©. We can do better. And, let’s be honest, nobody aspires to be the plain, unnoticed girl, everyone wants to be her sexier, more lucrative cousin: Research & Development.

As of late, economists and industry leaders alike have begun to urge policy makers not to let our plain, unnoticed girl slip through the cracks. We need her. Manufacturing may not be as sexy or as lucrative as its cousin, but if we don’t focus more attention on retaining it experts warn we will not only see an increasingly contracting middle class, but also increasing numbers of off-shore R&D jobs and fewer R&D jobs here at home (in other words, we might just lose the sexy cousin too).

According to a report published by The Brooking Institute last year, we have seen expanding employment in high-skill, high-wage and low-skill, low-wage occupations as employment in manufacturing (and other middle-skill, middle-wage occupations) has declined. If middle-skill, middle-wage job opportunities continue to decline, workers without four-year college degrees will become increasingly concentrated in low-wage jobs. That’s a big problem when we combine it with the slowing rate of bachelor’s degree attainment among young adults. It could mean serious trouble for maintaining the middle class. But manufacturing doesn’t just help keep the middle class afloat.

According to an article from this weekend’s New York Times, discussed in the Times’s “Weekend Business” podcast (incase you prefer to listen to your news like me), manufacturing may be vital to retaining R&D jobs. Louis Uchitelle, business and economics writer, poses what I’ll call the sexy cousin problem: “Innovation often originates in manufacturing, frequently in research centers near factories, which aid in the creation of products and the tweaking of them on assembly lines. As multinationals place factories abroad, they are putting research centers near them, with as-yet-undetermined consequences.” Ron Bloom, former Assistant to the President for Manufacturing Policy (who, the article points out, resigned in August and has not yet been replaced), is quoted as saying, “If you let manufacturing go, over time that will have a negative gravitational pull on innovation.” More and more multinational companies are co-locating their R&D and their manufacturing, if manufacturing continues to go overseas we are likely to see Research & Development in increasing numbers go with it.

UC Berkeley economist Laura D’Andrea Tyson points out in her “Economix” blog post from July 29th that the U.S. isn’t the only country facing this problem of declining employment in manufacturing, but we’re lagging behind our peers because we are not (not yet anyhow) doing anything about it.