More manufacturing jobs, but no renaissance

Feb. 9, 2012
Employment on the American factory floor is growing, up by 334,000 jobs over the past two years

Employment on the American factory floor is growing, up by 334,000 jobs over the past two years. Journalists have taken note of the trend. The tenor of the recent headlines on the subject echo that in the New York Times, which claimed that, “U. S. Manufacturing is a Bright Spot for the Economy.”

But growth in jobs is a case of good news/bad news. The good news is that reports show the economy is now producing the same amount of goods and services it did in 2007. The bad news: It is doing so with 6.3 million fewer workers, despite an unemployment rate that is falling. The fact is that industries that include construction, transportation, warehousing, waste management, and even manufacturing, were still shedding workers at least through 2010.

Growing businesses are the ones most likely to hire workers. And unfortunately, the industries that are now growing are typically not the blue-collar employers that lost the most workers during the recession. Figures from the U. S. Bureau of Economic Analysis show where the real growth in the economy has been over the last few years. It is not in manufacturing. Areas adding workers include agriculture, forestry, fishing and hunting, mining, retail trade, finance and insurance, health care, educational services, IT, and government.

Most of these are not what you would call blue-collar industries. U. S. employers in the blue-collar category are in the minority; the blue-collar industries adding jobs over the past few years can be counted on your fingers. They consist of mining and utilities, each accounting for a miniscule 0.5% of total U. S. employment.

Government figures show that a lot of the areas of expanding employment in the past few years are those associated with paper pushing. Finance and insurance have grown to account for about 4.6% of the workforce. The largest-growing employment area, unfortunately, is government, accounting for 16.9% of the U. S. workforce in 2010.

But economists say any job vacancies in these growing areas are more than offset by the joblessness stemming from still-struggling construction and manufacturing industries. This is distressing for unemployed blue-collar workers in that the few expanding areas of the economy, such as education and health care, typically are not fertile ground for workers with industrial skills.

All in all, the recent upturn in manufacturing jobs pales in comparison with the 2.3 million decline in factory payrolls over the past two years. Put another way, manufacturing employs 2 million fewer workers than it did just four years ago. This though the output of U. S. factories is up about 3% since 2001. The well-chronicled reason is that worker output/hour has climbed over 40% since that time, thanks to automation and adoption of new technologies.

It isn’t just the manufacturing industry that has become more productive. Economists tell us the economy in general has become more efficient at using labor. As brick-and-mortar bookstores put out of business by Amazon.com will attest, nearly all industries use fewer workers to generate the same amount of goods and services.

And that’s the rub. Productivity gains are just one more reason we are likely to see persistent unemployment, and why we shouldn’t expect to soon see headlines about a real boom in blue-collar jobs.

Leland Teschler, Editor

© 2012 Penton Media, Inc.

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