In his State of the Union speech, President Obama advocated tax policy changes to boost U.S. manufacturing. The idea is to create and keep well-paying manufacturing jobs in this country. It is a worthy goal, but one that may be appealing to a fundamentally flawed understanding of the situation.
Manufacturing has not disappeared from the United States. What went away was the 20th century.
The conventional wisdom is that U.S. manufacturing jobs have been shipped to China or some other low-wage country. And a quick look at the tags on just about anything in a Walmart would seem to confirm that.
In fact, it is the production of inexpensive goods that has largely been moved overseas. With that, American manufacturing has largely refocused on high-tech, highly automated, often highly precise work.
It is a shift with serious consequences, but the idea that America is out of the manufacturing business is not one of them. Writing in the January-February edition of The Atlantic, Adam Davidson explains that, Depending on which stats you believe, the U.S. is either the No. 1 or No. 2 manufacturer in the world.
What has changed is the number and kind of jobs. The popular image of manufacturing is of autos moving down an assembly line or rows of drill presses or lathes each operated by a unionized worker making good wages with benefits.
It is a picture more attractive in remembrance than in reality, but for 30 or 40 years after World War II jobs like that helped create the American middle class and all that entails. It is that scenario, not manufacturing itself, that went away.
In the factories of the last century, a typical worker might have started right out of high school and learned the trade on the job. Today, that path is increasingly unavailable.
Davidson looked at a factory making auto parts. Workers monitor and maintain the machines that actually make the parts. In some cases they work to tolerances of 10 millionths of an inch. As one worker told Davidson, If you know calculus, you definitely can be a machine operator.
Writing in the New York Times, Christina Romer, an economics professor and the former chairwoman of Obamas Council of Economic Advisers (and daughter-in-law of former Colorado Gov. Roy Romer) points out that today more than half of manufacturing workers have some college education, up from just 20 percent in 1969.
It is those 20th-century jobs that are gone. Forty percent of U.S. manufacturing jobs have disappeared since 1979. But at the same time, the Los Angeles Times cites an industry study to the effect that as many as 600,000 manufacturing jobs are now unfilled for lack of qualified applicants. How to adapt to that new reality is the question.
Obama envisions special tax breaks and changes in the tax code to keep U.S. firms from moving jobs overseas. But in the high-tech manufacturing of today, that may not be the answer.
Romer sees little to it. She looked at three areas used to justify a manufacturing policy market failures, jobs and income distribution and says, None are completely convincing. She concludes that any such policy needs to go beyond sentiment and history.
She is right. The so-called crisis in manufacturing has been unfolding for 40 years. But the real crisis is one of the American middle class and nostalgia for 20th-century factory jobs will not help.
There is no single, simple answer. But, as with so many things, education is again at the core.
