Manufacturing, who needs it?

July 11, 2013

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Flipping through The Costco Connection July 2013 magazine last night, I ran across an interesting tidbit on page 8—an image of a welder with the caption: “Debate goes on—in response to the June Debate, ‘Are U.S. manufacturing jobs still important to the economy?’” Clearly, I had missed that Debate in the June issue, so I made a bee-line to the household magazine repository to see if I could find the copy. No such luck, but I did find it online.

The Debate format features brief responses from experts to a yes-or-no question posed in the magazine. Readers (Costco members) then are encouraged to cast their votes.

According to every poll I’ve seen on the topic, the vast majority of Americans agree that U.S. manufacturing jobs are important to the economy. This poll is no different—98 percent of respondents said, “Yes.” Which leaves a mere 2 percent whose beliefs fall in line with the expert, Enrico Moretti, who answered, “No.”

Moretti, who holds the Michael Peevey and Donald Vial Chair in Labor Economics at the University of California, Berkley, and is the author of The New Geography of Jobs, argues that “the future of American jobs is not in manufacturing, it is in innovation. Look where job creation is concentrated today. The economic map of America shows three different countries. At one extreme are the country’s brain hub—cities such as Seattle; Raleigh-Durham, North Carolina; Austin, Texas; and Boston—with a strong innovation-driven economy and a labor force among the most creative and best paid on the planet.

“At the other extreme are cities once dominated by manufacturing—Detroit; Flint, Michigan; and Cleveland—with shrinking labor forces and salaries. In the middle is the rest of America, apparently undecided on which direction to take.”

He goes on to discuss how salary trends have changed since the 1980s. “In 1980, the average salary in Austin was lower than in Flint. Today it is 70 percent higher in Austin, and the gap keeps expanding with every passing year.”

According to Moretti, “the winners and losers in this process are not always who you expect. The dynamism of America’s innovation sector matters not just to scientists and software engineers. It matters to all of us. In my research, I
find that for each new innovation job in a city, five additional service jobs are created, in both professional occupations (lawyers, teachers, doctors) and nonprofessional occupations (waiters, hairdressers, carpenters). For each new software designer hired at Twitter in San Francisco, for example, there are five new job openings for baristas, personal trainers, therapists, nurses, and taxi drivers in the community.”

Moretti concedes that “manufacturing also has a multiplier effect, but it is much smaller. This means that the best way for a city or state to generate jobs for less-skilled workers is to attract innovative companies that hire highly skilled ones.”

Perhaps Moretti’s brain is feeling the effects of the rarified air atop academia, or the mind-blowing haze from Silicon Valley. Whatever the reason, he clearly does not understand the innovation and skill set required for today’s manufacturing. To me his argument sounds like a case for shipping all manufacturing offshore—who needs it—and concentrating solely on virtual technology.

In my opinion—and that’s what this blog boils down to—we need both high-tech and manufacturing innovation—programming jobs and manufacturing jobs. The more we can do in our own county, the less we have to rely on others. A country that cannot produce what it needs in the way of goods and food is simply putting itself in a precarious position.

(Incidentally, Moretti originally is from Italy. From 1993 to 1994, he was a social worker in the city of Cassano Magnago, Italy, the birthplace of Umberto Bossi. Just a factoid I found interesting.)

And yes, I fully understand that this discussion appeared in a big-box warehouse’s publication, the type of business that has been blamed for much manufacturing job loss. In my next post, I plan to take a closer look at these
megaretailers and their role, specifically in terms of how much of their inventory is U.S. made.

Let me leave you with two quotes printed in the July issue of the magazine regarding this debate:

"Yes, more U.S. manufacturing would be a very good step toward improving the economy and promoting jobs." (Member from Madison, Wis.)

"No. If a business can pay workers less in other parts of the world for the same product, from an economical point of view, it wouldn’t make sense to pay an American worker." (Member from Missoula, Mont.)

What do you think?

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