The Amazing Shrinking Manufacturing Base

My friend and fellow Twitter traveler @speedmaster posts the following snippet of a WSJ article:

Amateur Economist: Weve Become a Nation of Takers, Not Makers.

The rise in “government jobs” is pretty spectacular. But then, it shouldn’t come as that much of a surprise to Rochestarians, should it? When the University of Rochester is the number 1 employer?

I think the more shocking number in the article defines the depression of the manufacturing base. Over the course of the fifty year period described by the article, the population of the United States has doubled. The number of people working in the government has nearly tripled, but the number of people working in manufacturing has actually declined. Logically, the number of people working in manufacturing aught to be around thirty million (15m x 2) , but its a third of that number.

What are the prime movers of this change? The original article cites the “the offer of near lifetime security” in government jobs and also makes a demuring nod to “hugely beneficial productivity improvements” in other sectors of the economy. Well, gosh. Didn’t it use to be the case that manufacturing workers had nearly the same security in that less-efficient world? So the private sector has traded respecting and taking care of its workers for “efficiency,” but we need to do something about government jobs, or so the article suggests.

Its also worth pointing out that the article only compares manufacturing to government jobs, as though these were the only two sectors – and as if a “government job” was a single thing. What about if we take service industry jobs into account? Bloomberg just posted an article yesterday saying that the service industry is the fastest-growing sector of our economy.  A quick look at the Bureau of Labor Statistics’ break down of the current economy by occupation (admittedly, not recent) shows that the majority of those occupations are service jobs.

And yes, many “government jobs” such as nursing and social services jobs are service-related. Nor should we be surprised that, after decades of telling our kids to go to college, that they end up working in non-manufacturing jobs.

And to end the article, the writer suggests:

President Obama says we have to retool our economy to “win the future.” The only way to do that is to grow the economy that makes things, not the sector that takes things.

Here, here.


NYS’s Manufacturing Troubles: Now in Graph Form

The Empire State Manufacturing Survey is in for the month of July, and the numbers continue to go in the shitter.  What is the ESMS?  It’s a survey(PDF) sent out to a variety of manufacturers across the state by the NY Federal Reserve, posing questions about current conditions in terms of employment, orders taken, and also the sense of what the next six months will bring.

If that all seems terribly subjective and indistinct, well, that’s probably because it is.  And if one person’s sense of the future tends to be a bit hazy, then the collective wizdom of several manufacturing business’ secretaries must be equally flawed.  However, what we do get is a sense of the general mood, along with at least some vague notion of how business is going in terms of orders received and filled.

This year’s numbers continue the trend since early 2004, down, down, down.  In fact, the only number going up is the price index, which should surprise no one.  This month’s report does represent a slight up-tick in current conditions compared to last month, as the RBJ’s sunny headline dutifully reports, but in the body of the article they point out that the sentiment in terms of the coming six months is as low as it’s ever been since September 2001.  That’s bad.

And what this all means is a consistent drag on manufacturing employment and wages for the forseeable future.  Until we elect someone with the political will to renegotiate our supposed “free” trade agreements internationally, this trend will doubtless continue – to a greater or lesser degree – locally.