Both President Obama in his State of the Union address and Governor Snyder in his State of the State speech identified manufacturing as a key component of their economic growth strategy. Unfortunately, almost certainly, if the goal is more and better jobs it won’t work.
In a terrific Atlantic Cities column entitled Sorry Mr. President, Manufacturing Will Not Save Us Richard Florida makes the case that factory work is no longer the path to future American –– or Michigan –– prosperity. (Its the case that Don Grimes and I have been writing about for years.) Florida writes: “After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. … While there is much to applaud about the recent revival of American industry, manufacturing is simply insufficient to help revive lagging industrial regions or power the job creation the nation so badly needs.”
He goes on to list the reasons why that is the case:
- Manufacturing is not a big job generator. “American manufacturing is making a comeback, but is remains an anemic job creator. Manufacturing output is projected to grow from $4.4 trillion in 2010 to a projected $5.7 trillion by 2020, according to the Bureau of Labor Statistics. … But “the BLS projects the U.S. will lose another 73,100 manufacturing jobs by 2020, as manufacturing falls to just seven percent of total employment.”
- Many factory job are no longer high wage jobs. “Production workers across the United States average just $34,220 per year according to the BLS, less than half that of knowledge, professional and creative workers ($70,890) and not that much more than what low skill service workers in fields like food preparation, clerical work and retail sales ($30,597) take home.”
- Manufacturing does not translate into local economic growth and development. Since 2000, “employment in high manufacturing counties experienced a five percent decline, employment in the rest of the nation’s counties increased by five percent “revealing a stark divergence,” according the report” (from the Cleveland Fed).
(The New York Times recently published a related article entitled Rumors of a cheap-energy boom remain just that. Cheap energy was supposed to make American manufacturing more competitive, ultimately creating a million or more jobs. The Times reports little new factory jobs so far and no realistic hope for lots of factory jobs in the future.)
Florida concludes: When all is said and done, it’s not manufacturing that drives economic growth and creates new jobs, but innovation, creativity and talent. The big job generators for the past several decades and for the foreseeable future remain high-skill, high-pay knowledge jobs and low-pay, low-skill service jobs. We need to leverage and deepen the former, investing in the knowledge, technology and skill that drive innovation and economic growth. At the same time, we need to transform the more than 60 million low-wage service jobs into good family-supporting jobs like manufacturing jobs used to be.