The National Association of Manufacturers has been sounding alarms lately about a shortage of workers. Their average age is around 50, and 90% of NAM members say they can’t find enough skilled production workers.
Come again? What about all those factory workers being laid off due to foreign competition? How can manufacturers be shedding jobs all over the map, yet suffer a labor shortage?
This contradiction, in a nutshell, reveals a fundamental truth about the economic world we live in. It’s one that escapes comprehension by the man in the street, mainly because of distortion by the media and politicians who shape public opinion.
In 1942, 25 million people in this country worked in manufacturing. Today the number is around 15 million. Yet, those 15 million people produce three times the output of the 1942 workforce, a testimony to the growth in manufacturing productivity. Long before foreign outsourcing became a craze, U.S. factory workers were losing jobs at a steady pace to automation.
Many of the jobs that still exist in manufacturing require higher skill levels than the assembly line tasks of the past that could be learned in a day. Today’s production workers often operate computerized machinery, and highly trained technicians are needed to maintain and troubleshoot that equipment. These folks are very much in demand. A study by the Federal Reserve Bank of New York found that manufacturing jobs categorized as high-skill rose by 37% between 1983-2002. As NAM laments, however, many of those skilled workers are aging and not being sufficiently replenished by youngsters.
It’s mainly the low-skilled workers who are losing their jobs to less expensive counterparts in China or to robots. Their ranks declined 25% in the 1983-2002 period, according to the New York Fed study. Despite all the political posturing about saving American jobs, there’s virtually nothing that can be done to reverse this trend in the long run. Not when America’s unskilled work force gets paid in an hour what overseas factory workers earn in a day. Not when machines can do the work cheaper and be pushed to the breaking point without complaint.
Newspaper headlines always trumpet factory layoffs in big, bold type. This creates a public perception that our country’s manufacturing base is in its death throes. For some perspective, consider that China currently accounts for around 7% of the world’s industrial production, according to economist Alan Beaulieu. Yet, the U.S. and Canada combine for some 25%.
Although NAM does what trade associations do in highlighting threats to their constituents, with a different brush the group paints a completely different portrait of the industry as a pillar of the American economy. According to NAM:
Averse to anything that smells like good news, the media and politicians incessantly blather about job losses that they blame on unfair trade, corporate greed, illegal immigrants or any other handy bogeymen. If they were into confronting uncomfortable truths, they might say something like this instead:
“The U.S. in the 21st century is at the cutting edge of an Information Age economy. Citizens who wish to prosper in this era must acquire education or vocational skills that are in high demand. Willingness to work hard is an admirable trait, but unless coupled with advanced skills, it will become increasingly moot. Job security cannot be guaranteed by uneconomical benevolence on the part of employers or by marginalized unions. Nor can politicians do anything meaningful to help those who lack the wherewithal to keep pace with the needs of 21st century businesses.”
That’s straight talk to the work force. The message to manufacturers is simply that innovation in both product development and production technology remains the key to staying competitive in the global economy. But they already know that. It’s what’s kept them alive throughout.
The grim reapers in the media need a talking to, however. To them, let’s say, before swinging the scythe with wild abandon, try digesting the number 258 billion. That’s the staggering amount of dollars U.S. manufacturers are planning to spend this year on more than 5,000 plant start-ups, expansions and maintenance projects, according to Industrial Info Resources, which tracks such things.
If that’s the sign of a dying industry, they are going out with a supernova-size bang.
