Obama’s Jobs Plan Leaves Out Manufacturing

Akito Yoshikane September 14, 2011

President Barack Obama chats with an employee as he visits contract manufacturer WestStar Precision September 14, 2011 in Apex, North Carolina.

Pro­duc­tiv­i­ty is up, so where are the jobs?

When Pres­i­dent Oba­ma announced his jobs plan last week, he pro­claimed that more goods should be pro­duced domes­ti­cal­ly to help bol­ster the strug­gling man­u­fac­tur­ing sec­tor.

If Amer­i­cans can buy Kias and Hyundais, I want to see folks in South Korea dri­ving Fords and Chevys and Chryslers. I want to see more prod­ucts sold around the world stamped with three proud words: Made in Amer­i­ca,’ ” he said.

The dec­la­ra­tion, which was pref­aced ear­li­er by his sup­port for new free trade agree­ments, drew applause from mem­bers of Con­gress. But some experts are say­ing the U.S. has not estab­lished a clear plan on how to revive the man­u­fac­tur­ing indus­try beyond out­lin­ing broad goals, adding that politi­cians have not paid enough atten­tion to the decline.

Man­u­fac­tur­ing is pro­ject­ed to have the high­est con­tri­bu­tion to nation­al out­put by 2018, but jobs are not expect­ed to grow, a new study has found. With com­pa­nies already elim­i­nat­ing jobs or mov­ing them over­seas, that hurts areas like the Mid­west, where man­u­fac­tur­ing jobs have been dis­ap­pear­ing. Accord­ing to a new report by George­town University’s Cen­ter on Edu­ca­tion and the Work­force, the indus­tri­al heart­land was hard­est hit by the eco­nom­ic cri­sis. More than 610,000 man­u­fac­tur­ing jobs have been elim­i­nat­ed since 2007, rep­re­sent­ing near­ly one-third of the sector’s nation­al job loss­es dur­ing the recession.

With an empha­sis on more ser­vice-ori­ent­ed labor, many of these jobs that pro­vid­ed decent pay with few skills are gone for good, the report said. Two mil­lion jobs will be added by 2018, but only because work­ers are retir­ing. Many of the Mid­west­ern states have shift­ed toward oth­er indus­tries like health­care and edu­ca­tion. That shift is pro­ject­ed to cre­ate demand for high­er skilled work­ers with col­lege degrees, cre­at­ing a gap for mid­dle-income earn­ers hop­ing to find mid-skilled work.

And over­all, the man­u­fac­tur­ing indus­try has con­tributed a small­er share to the country’s gross domes­tic prod­uct. More than 60 years ago, the indus­try account­ed for 28 per­cent of the U.S. econ­o­my. Today, it has fall­en to 11.7 per­cent, indi­cat­ing that the jobs are dis­ap­pear­ing. In the Mid­west, the man­u­fac­tur­ing sec­tor has fall­en from 39 per­cent of jobs dur­ing the 1960s to 12 per­cent today, only slight­ly high­er than the nation­al aver­age of 9 per­cent.

Yet even though the GDP has fall­en, com­pa­nies are still rely­ing on man­u­fac­tur­ing employ­ees to work hard­er. In 2010, work­er pro­duc­tiv­i­ty was three times high­er than it was in 1970, with each employ­ee, on aver­age, now pro­duc­ing $300,000. But jobs are not expect­ed to grow in the future despite high­er out­put. The report writes:

Our pro­jec­tions show that man­u­fac­tur­ing out­put will grow from rough­ly $4.0 tril­lion in 2008 to $4.9 tril­lion in 2018, rank­ing it as America’s largest indus­try when mea­sured by con­tri­bu­tions to nation­al out­put. But that will not trans­late to job growth. In fact, even as manufacturing’s out­put explodes over the next decade, its work­force will contract.

Even though many Amer­i­cans are work­ing hard­er than in the past, many multi­na­tion­al com­pa­nies have shift­ed much of their pro­duc­tion abroad. Dur­ing the last decade, cor­po­ra­tions have cut 2.9 mil­lion domes­tic jobs but added 2.4 mil­lion abroad. Those com­pa­nies include Gen­er­al Elec­tric, head­ed by chief exec­u­tive Jef­frey Immelt, who heads Obama’s Job Coun­cil.

The Cen­ter for Amer­i­can Progress explains why it’s impor­tant to keep oper­a­tion and man­u­fac­tur­ing jobs in the domes­tic sphere:

When the basic man­u­fac­tur­ing leaves, the feed­back loop from the man­u­fac­tur­ing floor to the rest of a man­u­fac­tur­ing oper­a­tion — a crit­i­cal ele­ment in the inno­v­a­tive process — is even­tu­al­ly bro­ken. To main­tain that feed­back loop, com­pa­nies need to move high­er-skill jobs to where they do their man­u­fac­tur­ing.

And with those jobs goes Amer­i­can lead­er­ship in tech­nol­o­gy and inno­va­tion. This is why hav­ing a crit­i­cal mass of both man­u­fac­tur­ing and asso­ci­at­ed ser­vice jobs in the Unit­ed States mat­ters. The indus­tri­al com­mons” that comes from the cross-fer­til­iza­tion and engage­ment of a com­mu­ni­ty of experts in indus­try, acad­e­mia, and gov­ern­ment is vital to our nation’s eco­nom­ic competitiveness.

The Oba­ma admin­is­tra­tion has insti­tut­ed some ini­tia­tives. In June, the pres­i­dent announced a $500 mil­lion plan to spur jobs and tech­no­log­i­cal inno­va­tion as part of a man­u­fac­tur­ing part­ner­ship with busi­ness­es, uni­ver­si­ties and gov­ern­ment. As he said in his speech, some skills train­ing are also offered at com­mu­ni­ty col­leges.

The spe­cif­ic plan, how­ev­er, does not appear con­crete. An MIT econ­o­mist told the New York Times that the U.S. is the only indus­tri­al pow­er with­out a strat­e­gy or even a pro­ce­dure for think­ing through what must be done when it comes to man­u­fac­tur­ing.” Oth­ers point to the osten­si­ble decline and shift toward finan­cial and real estate sec­tors as a rea­son why politi­cians aren’t pay­ing atten­tion.

The old days of man­u­fac­tur­ing may be long gone, but this is an indus­try that is slat­ed to soon have high­er pro­duc­tiv­i­ty out­put than any oth­er in the coun­try; it’s also an indus­try whose decline can fur­ther widen the mid­dle class gulf unless ade­quate edu­ca­tion and train­ing pro­grams are put in place. Tax cuts and new spend­ing are a large part of Obama’s jobs plan, but the con­se­quences of neglect­ing the man­u­fac­tur­ing sec­tor is hard to ignore.

Aki­to Yoshikane is a free­lance writer based in Chicago.
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