RSS Feed MenuI would like to see the numbers the President uses to back up some of his claims. This weekend he told the Toledo Blade and the Pittsburgh Post-Gazette that it is going to take decades to rebuild the United States’ declining manufacturing base. That’s misleading because President Obama doesn’t mean total manufacturing output, or output per worker. He means the number of people employed in the manufacturing sector.
It’s true that the number employed is declining. Right now 12 million people are in the manufacturing industry, down from almost 20 million in 1980. The last time that was below 12 million was 1940, when the U.S. population was less than half of what it is today. As a percent of the workforce, the number falls every year.
But President Obama is wrong when he says that the manufacturing base is in decline. Total output by the manufacturing industry continues to grow, as does productivity. In this way we manufacture more goods, but require fewer people to do it. It’s a good thing, as long as we can help those who lose their jobs to transition into better ones.
We have a lot to be proud of in American manufacturing. In 2007 we made $1.6 trillion worth of goods, and exported a huge chunk of them. Think about it this way: the amount of goods manufactured in the United States equals the total output of Russia’s economy, and the amount of goods exported equals the total output of India’s economy. We do that with less than a tenth of our labor force. That’s pretty incredible.
We lose manufacturing jobs because we learn how to do them more efficiently or because it’s cheaper to do them elsewhere. President Obama wants these jobs back, but we can’t get them back. In fact, we don’t want them back. We want better, higher paying jobs to take their place. Most of the time, those jobs are in service or technology sectors of the economy. We’ve gone from manufacturing everyday items and simple electronics to figuring out how to make computer chips and airplanes. Instead of looking backward to the jobs Americans used to do, let’s focus on the jobs Americans do better than anyone else.
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balconesfault // Sep 22, 2009 at 8:50 am
Total output by the manufacturing industry continues to grow
Interesting that the author actually links to this:
http://www.federalreserve.gov/releases/g17/Current/table9.htm
And THAT table shows almost a 30% decrease in consumer durable goods output between 2000, and second quarter 2009. Yes, consumer non-durables has increased (stuff like cosmetics, food, cleaning products, fuel, office supplies, packaging and containers, paper and paper products, etc), but that’s not the stuff that we Americans usually think about when we’re discussing our manufacturing base.
We usually think of the manufacturing sector as cars and trucks and refrigerators and air conditioning units and computers and other durable goods like that. And Obama is spot on that we’ve lost ground there.
searchlight // Sep 22, 2009 at 11:04 am
Of course the manufacturing base has declined. Whole industries that build consumer durables long ago moved offshore, along with the engineering expertise and production support that enables advanced manufacturing.
Tom Church cherry picks supporting facts and ignores some basic contradictory ones. The $1.6 Trillion in manufactured goods he cites almost certainly represents a far lower proportion of total economic activity than 30, 20 or 10 years ago. Does this $1.6 Trillion even match past domestic manufacturing in real (inflation-adjusted) terms? How much of the increase he claims comes from inflation?
What of new technology, such as the efficient solar panels that may soon be installed on a rooftop near you, feeding juice into the grid when not powering the air conditioning? Virtually all production in this nascent industry is offshore.
And what of the productivity gains Mr. Church so proudly cites? They are undeniable – but do not discount or entirely mitigate the corrosive effects of the flight of manufacturing to Asia. American workers are certainly among the most productive in the world, and their productivity has increased with remarkable consistency. What has it gained them? Where are the income gains that should reasonably have followed from productivity growth?
We all know the answer to this: the marginal additions to wealth generated by increased labor productivity accrued to the owners of capital. As the economy grew over the past 30 years, the very richest Americans vastly increased its share of the national wealth, while the middle class fell behind. Working Americans made up the difference by going further into debt.
tvchurch // Sep 22, 2009 at 12:38 pm
Searchlight,
Thanks for commenting. There is a paper by Robert J. Gordon at Northwestern you might be interested in regarding inequality among Americans. The summary and actual pdf are available here: (http://www.nber.org/papers/w15351).
There is another paper I can’t seem to find right now that measures the affect of women working on inequality in the United States. It’s fascinating because in the last few decades the proportion of women working extremely high paying jobs (lawyers, doctors, etc.) has risen compared to men, which I think you’ll agree is absolutely a good thing. But households where two parents earn much more than those where only one parent works. Going from one lawyer earning 140k to two in the family means two things: (1) the family is now considered rich, and (2) overall inequality rises dramatically. Are the people who earn less than the family worse off? I’d argue no. But there is more inequality.
Of course this doesn’t explain all rises in inequality, it just illustrates that we face trade-offs.
Thanks for reading,
TC
balconesfault // Sep 22, 2009 at 1:05 pm
Are the people who earn less than the family worse off? I’d argue no. But there is more inequality.
If the location where you purchase your home in America didn’t have a huge role to play in how safe your kids will be growing up, and how safe your home will be from property crime … in how good of schools you have access to … in what quality of recreational amenities like parks and pools and nature trails and lakes were close at hand … in how much time the parents need to spend behind the wheel of a car getting to and from work … in what kind of air you breathe, or whether your neighborhood is likely to have been built near, or even on top of, a waste landfill … in a dozen other “quality of life” indicators … then differences in household income would not result in harmful impacts to the family earning less.
But real life experience tells us otherwise. In many places across America, people are working more and harder specifically to maintain the ability to live in communities or portions of a communities where the layout and services provide a significantly higher quality of life.
Now, this is a natural phenomena of the free market, and in many ways a laudable one. But what it tells us is that as a society we could do quite a few things not to bias the playing field against that household where they’d like a parent to stay home and raise kids. More and more uniform spending on schools and parks budgets and police, for example, and stronger enforcement of environmental protections. Better public transit systems so that a parent returning from an hour commute from downtown isn’t completely spent upon getting home. Levying taxes more on income than on property value, so that people aren’t driven from a home they’ve lived in for years due to increasing taxes.
And we haven’t even touched on medical and college expenses and ability to get a significant portion of the family diet from fresh produce and meats, rather than processed foods. In very many cases, the people earning less are certainly “worse off” on those counts.
tvchurch // Sep 22, 2009 at 1:50 pm
Balconesfault,
Thanks for commenting. I should have added in a few more words to this section:
“Are the people who earn less than the family worse off? I’d argue no. But there is more inequality. ”
That should actually read:
“Are the people who earn less than the family worse off *than they were before*? I’d argue no. But there is more inequality. ”
Without that addendum, it appears as if I mean the family that makes more is no better off than others who earn less than they do.
sinz54 // Sep 22, 2009 at 8:21 pm
balconesfault & searchlight:
The United States still has the largest industrial plant on earth.
The U.S. leads the world in aircraft and aerospace. (But you liberals hate that industry because of the so-called military-industrial complex.)
The U.S. leads the world in production of pharmaceuticals. (But you liberals hate “Big Pharma.” Wait till YOU get a serious illness and the meds from “Big Pharma” are all that stands between you and the grave.)
The U.S. leads the world in production of chemicals. (But you liberals hate that industry because you think it’s raping the environment.)
The U.S. leads the world in software development and production. (But you liberals hate that industry because it’s not unionized.)
You like the auto industry a lot, of course–because the United Auto Workers is the campaign arm of the Democratic Party throughout the Rust Belt.
balconesfault // Sep 22, 2009 at 8:45 pm
Sinz.
We can talk when you get all that straw out of your mouth.
Cforchange // Sep 22, 2009 at 10:18 pm
Of course what we make – we make better or make it in a most productive manner. Of course what we don’t make it’s made cheaper elsewhere. But that doesn’t address the throngs of American’s who can’t find their way in a highly competative environment. Mr Church – these folks vote and so goes a winnable majority.
“But President Obama is wrong when he says that the manufacturing base is in decline” – oh poo. Who cares about the people part… The plight of the GOP is no mystery.
EscapeVelocity // Sep 23, 2009 at 3:21 am
The South is the new industrial growth center as well….the North doesnt like that. Obama will protect the Northern Unions and Rusting Industrial centers as that is who elected him, to do exactly that.
Its not good policy for the United States though, but rather a section of the United States, over others.
Same ole, same ole.
sinz54 // Sep 23, 2009 at 10:14 am
escapevelocity: The South is the new industrial growth center as well….the North doesnt like that. Obama will protect the Northern Unions and Rusting Industrial centers as that is who elected him, to do exactly that.
For once, I happen to agree with you.
But it’s more than just protecting the Northern unions.
It’s about an Obama industrial policy that is designed to favor politically correct industries and disfavor industries that are considered to have undesirable social costs. In other words, “socially responsible investing” scaled up to the Federal level.
As I said, Obama and his Left supporters couldn’t care less how many jobs are lost in the aerospace, chemical, and pharmaceutical industries–even though many workers in aerospace and chemicals belong to the Machinists’ Union. They couldn’t care less if those industries go down and are eclipsed by their foreign competitors. Because they hate military systems, chemicals, and pharmaceuticals as being inconsistent with their Greenpeace-type vision of America.
Obama wouldn’t care if Boeing went out of business. “What do we need weapons for anyway? Liberals don’t believe in military force. And what do we need commercial jets for anyway? They produce greenhouse gases and contribute to global warming. Let’s forget about flying cross-country and go back to passenger rail instead!”
Cforchange // Sep 23, 2009 at 10:30 am
Well escaper don’t you think it was a section of the US over another for the past many years? What was fair about that? Then what sense does it make to build up areas where natural resources like water do not match the population. How does that annoint this region as the new industrial growth center?
The premise that it is cheaper to operate in the South is plainly false. When taking off the table – state tax incentives to the courted business then the federal subsidies provided to the state to construct the infastructure, we would have to be fools to believe that it is simply cheaper to operate in the south. Infastructure costs in todays dollars versus using established systems – the math just doesn’t add up.
Plus, most housing and even some real estate taxes in the south are more costly than the areas where the GOP has flamed out. Please tell me how this policy has been good for the entire United States and not just the South section??
This article is at the very heart of the GOP problem and is why the election was lost. It takes a majority to elect the leader of the free world . If the majority of PEOPLE not production has been relegated to work at a southern star like Walmart, I believe in 2008 you have witnessed the results that will remain until this situation is rectified.
So if BO confronts the problem and creates a situation where there is prosperity again for the majority- he is doing the GOP a favor. Maybe the party is just not capable of developing ideas that recreate prosperity – haven’t taxes been historically low and here we are. Look here at the essence of this very article. Some of us are extremely productive so who cares about the 8 million displaced in terms of 1980 numbers. Oh but BO is squarely wrong, wrong, wrong. Maybe the GOP is for winners only – but the majority are not winning now.
There are many criticism’s that the GOP has no new solutuions – they’re clinging to the ole history of the last 2 decades with nothing new to offer. This article falls into that category, what you’ve personally felt no pain so try convincing others, nothing has to change! This might work if we were all invited for free to move south for a nice big paycheck but somehow I don’t think so…
Escaper – good luck with painting the North and Rusting cities as the source of the problem. I don’t know that sounds like a sort of communism – expecting 1/2 half of the country to march in step so yu’all can continue to click the keyboard at your day job, overspend on your non coastal real estate then shop until you drop, wax the Lexus and golf in your spare time.
balconesfault // Sep 23, 2009 at 11:23 am
As I said, Obama and his Left supporters couldn’t care less how many jobs are lost in the aerospace, chemical, and pharmaceutical industries–even though many workers in aerospace and chemicals belong to the Machinists’ Union. They couldn’t care less if those industries go down and are eclipsed by their foreign competitors. Because they hate military systems, chemicals, and pharmaceuticals as being inconsistent with their Greenpeace-type vision of America
Sinz continues to embrace his inner wingnut. So rational at times … and then he turns into a Dittohead on certain issues.
midcon // Sep 23, 2009 at 1:35 pm
The government tracks 92 categories of manufacturing, which is a grouping of 473 manufacturing industries. To encapsulate all the data represented by those categories into arguments that our manufacturing is or is not in decline is simplistic and silly and useful only in sound bites, sloganeering, and sublimal messaging for the masses.
If someone (including you Mr. Church!) wants to have a cogent discussion of what we manufacture now, or should manufacture, and the effect it has on the our economy and national security whether it is in decline or whether we should care, I suggest you delve into sources such as: http://www.census.gov/indicator/www/m3/ and start articulating arguments for what we should be manufacturing in this country and why and what the affect will be.
If the right/GOP wants to be the intellectual party, stop trying to be so simplistic. We live in a complex world, our desire for simplification notwithstanding, we need to deal with this complexity and educate those who promote the thumbs up or down methodology of governance. Binary thinking and decision-making is what got the U.S. into our current state. I’ve had enough of that the past decade to last the rest of my life. Just as in health care it is not an either or condition when it comes to manufacturing.
For informational purposes – certain manufacturing industries are in decline – some should stay that way – some should not. Which ones we need to nuture depends on the economic and national security impact. For example: How would you feel about M3: 12B Tobacco Manufacturing? Should it be in decline? If it is should we rescue from decline? Or how about M3:31A Iron and Steel Mills and Ferrous and Ferroalloy and Steel Products Manufacturing? Should we, shouldn’t we?
Come on folks. You want to debate the state of manufacturing in this country? Then I challenge you to understand the state of manufacturing in this country. I haven’t seen anything here thus far leads me to believe that understanding exists.
EscapeVelocity // Sep 24, 2009 at 11:30 am
Yes, the car manufacturing business should be exihibit A.
All the foreign car manufacturing companies came in a located in the South. Not in the North (where you are claiming has the infrastructure). Which is a idiotic argument…but really not the meat of the contention.
But none of the American companies located new fascilities in the South….which have proven to be better for making profits for the companies that did locate there.
Now the South and the competition is asked to bail out GM and Chrysler.
Screw them. Let them die and the factories in the South prosper….let the market function.
EscapeVelocity // Sep 24, 2009 at 11:34 am
The American South was a backwater subsidiary to Northern industrial area for decades, and the North didnt give 2 shits about the lack of Southern industry and in fact prevented factories and industrial activity from moving down here with the cheaper yet highly skilled and abled labor/workforce.
And now we should bail those bankrupt bastards out.
Screw THAT! Let em enjoy the fruits of their greed.
sinz54 // Sep 24, 2009 at 1:03 pm
CforChange: we would have to be fools to believe that it is simply cheaper to operate in the south.
Of course it’s cheaper.
They have “right to work” states, which allow non-union factories.
Housing costs are MUCH cheaper. (Compare a 3 bedroom house in the Boston area to a 3 bedroom house in Mississippi.) Which means you can get by on a lower wage.
And so, labor costs are cheaper. Japanese auto manufacturers operating in the South pay a lower wage than the Detroit auto makers do. But since living costs are lower too, they have no trouble finding workers.
sinz54 // Sep 24, 2009 at 1:04 pm
midcon: How would you feel about M3: 12B Tobacco Manufacturing? Should it be in decline? If it is should we rescue from decline? Or how about M3:31A Iron and Steel Mills and Ferrous and Ferroalloy and Steel Products Manufacturing? Should we, shouldn’t we?
Leave it up to the marketplace to decide who wins and who loses. And the Government should NOT, repeat NOT, bail out the losers.
I don’t believe in industrial policies.
EscapeVelocity // Sep 24, 2009 at 1:23 pm
If you want GM to survive, move it South.
Having Southern workers subsidize the high wages and benefits of Northerners is criminal!
EscapeVelocity // Sep 24, 2009 at 3:35 pm
Its like a ghost town on this thread sinz.
Wonder why?
Cforchange // Sep 24, 2009 at 3:55 pm
Sinz #17
So you say… Housing costs are MUCH cheaper. (Compare a 3 bedroom house in the Boston area to a 3 bedroom house in Mississippi.) Which means you can get by on a lower wage.
Hmm, let’s change that to: Housing costs are MUCH cheaper. (Compare a 3 bedroom house in the Boston area to a 3 bedroom house in Cleveland.) Which means you can get by on a lower wage.
And Again: Housing costs are MUCH cheaper. (Compare a 3 bedroom house in the Boston area to a 3 bedroom house in Buffalo.) Which means you can get by on a lower wage.
and again: Housing costs are MUCH cheaper. (Compare a 3 bedroom house in the Boston area to a 3 bedroom house in Detroit.) Which means you can get by on a lower wage.
one more time: Housing costs are MUCH cheaper. (Compare a 3 bedroom house in the Boston area to a 3 bedroom house in Pittsburgh.) Which means you can get by on a lower wage.
Sorry, I’m not buying that the southern move is cheaper. Sinz you haven’t even mentioned infastructure – new roads and sewage plants and more expensive water, higher utility bills. (Water bills are huge in the south.) No matter who pays – business or government, it’s still a cost to do business. Plus plenty of this development during the past 2 or 3 decades has occurred is in crazy places subject to flooding, tornadoes and the effects of hurricaines. This is reflected in much higher business insurance rates. Adding up all business expenses including new facility construction, it can’t be cheaper to operate as newness in the South. Most likely it costs the same. It’s just a matter of who is profiting from the entire pie. Most likely it is self interest, because I haven’t experienced a decent return on my publically held stocks for quite some time.
Maybe LABOR wages are less, that’s the way of the south. It’s evolutionary that they pay anything.
The north was established first because bsinesses used to locate where resources were located meaning both skilled humans and product components. Example – Steel was made in Pittsburgh because it has the purest seam of coal in the world available there. Plus oil was 1st discovered in Titusville PA… It wasn’t a discriminating decision, the ingrediants were readily available.
None of us can compete with China so now what do we do? I’m glad that the president is at least giving this important issue some attention – it was overlooked for the past 8. Now we make nothing so midcon #14, what if we lose our skills(which we are) and we lose our ability to import. There’s a threat to national security, a mostly unskilled workforce – mouse clicking doesn’t count as a skill.
EscapeVelocity // Sep 24, 2009 at 4:06 pm
I’m not buying that the southern move is cheaper — CforChange
Blind arrogance!
None of us can compete with China so now what do we do? — CforChange
Those rat bastards in the South are killing us, so lets blame China!
LOL!
The same was said of the Japanese….now they build cars in teh South.
You are like a broken record. The North needs to come to grips with their lower standard of living in the future or move South. This protectionist nationalization BS, combined with xenophobia and spite that other people are doing well, is downright ugly!
Cforchange // Sep 24, 2009 at 4:49 pm
Escape – we lost the election because the majority voter percieved that the US is on the wrong path. It would appear to me that you are the broken record if you think it just McCain & Palin lost the election and mass angst is good for the country. The majority has declared time for a new approach. I regret that we don’t have GOP leadership but we as a nation must attempt to move forward.
I must really hit your buttons because beyond the rage, I can’t find much logic in you remarks.
Move south, never. Your underground water table will be too polluted from the north. You’ll run the risk of getting addicted to meth just by drinking it. May sound crazy but I wouldn’t risk it.
EscapeVelocity // Sep 24, 2009 at 6:28 pm
Enjoy your bigotry, that is all you have to offer the South.
And we arent buying it.
It wont be long till the 2010 elections and then the 2012, and then we will tell, you, you lost the election, the people rejected you. Sore loser, nan nah nan nah boo boo!
LOL!
But Im sure you will continue to cherish your anti Southern bigotry.
Maybe you should come up with a better selling point to convince Southerners to your way of thinking….rather than….you ignorant backwards arse uneducated bitter clinger racist hillbilly hicks!
Frum Forum’s David Frum: “American Manufacturing is Not in Decline” « High Road Network // Nov 9, 2009 at 7:43 pm
[...] Posted by The Bridge in Uncategorized. Leave a Comment Journalist David Frum helps dispel the myth that manufacturing is dead. [...]