I wasn’t necessarily going to write about this, but as it turns out Labor Day is a pretty good time to make this point.
When the unemployment numbers came out last Friday, it turned out that manufacturing jobs were one of the star performers as the sector gained 36,000 jobs in August – almost 1/4 of the total gain.
You may recall that for most of Barack Obama’s term I often referenced a union-backed organization called the Alliance for American Manufacturing, generally quoting their president, Scott Paul. He’s still there, and while he seemed to be pleased with the August results he’s still singing his protectionist song:
Did the robot revolution take the month off?
Adding 36,000 new factory jobs in August is good news for American workers. For the first time in a long time, manufacturing punched above its weight in the job market, accounting for 23 percent of total job growth. There’s great potential for continued manufacturing job growth – but only if we get the policy right.
How can we keep up the momentum? Pass an infrastructure bill with strong Buy America preferences to put more people back to work. The administration must also invest in training the workers of the future, move forward with rebalancing trade, and hold China accountable.
One facet of the AAM that interested me early on was their tracking of an Obama promise to create 1,000,000 manufacturing jobs – a pledge for which he fell far short by a factor of over 2/3. (Color me surprised </sarc>.) So it’s very intriguing to me that, through just eight months this year, the Trump score is already at 137,000. (Granted, there’s a slight bit of overlap from the Obama administration, but whatever bit of momentum began there may have come once it was assured Trump would be the victor in 2016.) On that pace, Trump would be in the 600 to 700 thousand range in his term.
I also think it’s fascinating that Paul talks about the “robot revolution” taking the month off but in the same statement beseeches the Trump administration to “invest in training the workers of the future.” As wage pressure is placed on the job market through misguided local and state government policies, such as the $15 minimum wage, tasks as mundane as attaching fenders on the assembly line or asking “do you want fries with that?” are going the way of the buggy whip, yielding to more skilled occupations such as working on those robots which make up the revolution. If you’ve seen pictures of modern assembly lines, automobiles and other large objects are put together more and more by mechanized means rather than a worker doing the same task of fastening rivets for eight long hours – a time when he could get tired, be less than at his best thanks to hard partying the night before, or just not trained up to the quality required for the task.
It’s true that unfair labor practices and currency manipulation have been factors in the decline of American manufacturing, but there were other processes that have affected all domestic businesses. Just ask yourself: how else would it be logical that an American manufacturer relocate to China when you consider the shipping time and costs and the learning curve needed to train hundreds of employees who may not be familiar with what the American market desires? Obviously those expenses were outweighed by the far lower wages they could pay Chinese workers, the removal of stringent regulations (not just environmental, but dealing with workers as well), and the lower tax costs. Over a 30-year period, “Made in America” became “Made in China,” and that’s often still the case today.
But I don’t think we have to be protectionist if we can create the conditions that cancel out several of the factors that drove manufacturing overseas. We already have a head start if we can keep our energy costs down by employing the resources we were blessed with instead of pie-in-the-sky schemes like dependence on unreliable wind or solar power. Add to this a corporate tax rate that is fair and not confiscatory – losing almost 4 out of every 10 dollars of corporate income seems to me a much larger piece of the pie than government needs or deserves – and a predictable regulatory regime based on common sense rather than being capricious and arbitrary, and much of the issue will be solved. At that point it’s up to the good old American worker to do the jobs Americans will do if given a shot. For example, someone has to know how to fix those machines that weld together automotive parts, and they probably won’t need a college degree to do it.
My father, who Lord willing will turn 82 in a month and has probably never turned on a computer, grew up in an era where he could finish high school and find a job at a concrete block plant doing maintenance. It was a union shop and gave him a good living, although he was unhappy at times with the union because it treated everyone equally whether they pulled their weight or not. Thousands of men around my hometown of Toledo who grew up in that era could tell a similar story as they got out of high school and went to work at a number of automotive (and other) manufacturing plants: Willys Jeep, GM Hydra-Matic transmission, Ford Stamping, Toledo Scale, Libbey Glass, and so forth – all union shops, and all providing a good middle-class income.
Kids graduating from high school now, though, are seemingly consigned to dead-end service jobs, as the days of your uncle getting you in at the Jeep plant are pretty much gone. But America needs to get back to making things, young men (and women) need jobs that can support a family, and the academic world needs a shakeout to a point where college is geared more toward the students who have the academic chops to succeed there. (Not everyone is college material in the traditional sense – some people just are geared toward and have the aptitude for working with their hands rather than sitting through a freshman English class.) A rebirth in American manufacturing can accomplish all of these goals.
So on this Labor Day and its implied salute to the American worker, consider what could be done to improve his or her lot. Lightening government’s load on industry seems to me a key step in making us the place that makes things again.