The Good Old Days of Manufacturing Are Long Gone

 
    "Both Donald Trump and Kamala Harris are vowing to engineer a manufacturing renaissance. Such promises evoke 1950s-era memories of strong communities full of ordinary Americans, many without college degrees, earning attractive pay and benefits for their hard work.

    Manufacturing bottomed out at around 10 percent of nonfarm workers by 2019. The numbers employed in manufacturing started to recover under President Biden and may continue to rebound. But what results from that growth won’t resemble these misty recollections.

    Many of those roles will need to be filled by immigrants.

    In 1950, when manufacturing was near its peak as a share of total employment, the mostly male working population was growing at a steady clip, thanks in part to a fertility rate of 3.1 children per woman.

    The complexion of the working population and its growth rate has since changed. While women and immigrants helped offset the slowing growth of the native-born population, it hasn’t been enough: Two-thirds of respondents to a National Association of Manufacturing survey this past spring said that their biggest challenge was attracting and retaining employees.

    The industry group further expects that an additional 3.8 million manufacturing jobs will likely become available in the coming decade, both as older workers retire and as initiatives enacted in the Biden administration come online, including those tied to the energy transition and strengthening strategic industries such as semiconductors. That will require coming administrations to depend even more on foreign-born workers in a virulently anti-immigrant climate.

    More extensive use of technology may also help fill the gap.

    Even if every estimated open role is filled, the total employed in manufacturing would still be about three million short of its 1979 peak, according to Federal Reserve Bank of St. Louis data.

    Another big difference from the earlier era: More modern manufacturing roles will require college degrees. The percentage of manufacturing workers with bachelor’s degrees hit roughly 30 percent in 2016 compared with 8 percent in 1970, according to a study by Georgetown University’s Center on Education and the Workforce. And a 2022 N.A.M. study found that nearly half of the manufacturing job openings so far that year, around 1.2 million, required at least a bachelor’s degree.

    And much more so than in the past, the United States won’t be able to achieve a manufacturing resurgence without global collaboration with our allies.

    While the United States is working to reduce its dependence on China, particularly in certain strategic sectors, it cannot succeed in its national security goals by doing so alone. In numerous industries, such as semiconductors, where key parts of the supply chain are dominated by one or a small handful of companies in countries including Taiwan and the Netherlands, the United States has to partner with companies overseas. It doesn’t have the needed expertise at home, at least for the foreseeable future.

    Thanks in part to capital made available through the CHIPS and Science Act and the Inflation Reduction Act, foreign direct investment in U.S. manufacturing reached a record high last year, at more than $2.2 trillion, according to one estimate. U.S. affiliates of foreign multinational firms employed nearly 23 percent of total manufacturing workers in 2021.

    Manufacturing’s comeback will depend in part on the next U.S. president’s willingness to embrace policies that reflect these current realities.

    Former President Donald Trump’s proposals to strengthen domestic manufacturing include tariffs. Tariffs are likely to spark a trade war that puts at risk needed overseas’ investments in the United States — which would likely work against manufacturing employment. A 2019 Federal Reserve research paper found that U.S. tariffs levied under Mr. Trump in 2018 and 2019, along with retaliatory tariffs from foreign countries, led to a 1.4 percent reduction in manufacturing employment, or roughly 175,000 jobs that would have otherwise been created.

    Both candidates promise to curb the inflow of illegal immigrants (with Mr. Trump pledging to deport millions of undocumented immigrants).

    The next president will need to balance that goal against not discouraging legal immigrants needed to fill the growing manufacturing sector’s job openings.

    Whatever the outcome in November, the next president will face many challenges in creating a manufacturing renaissance that is broadly felt across the economy. He or she would be well served to ensure that voters realize that success, if achieved, will look very different from what they may imagine from the past.

    Rebecca Patterson is an economist who has held senior roles at JPMorgan Chase and Bridgewater Associates." [1]

 If you pay them decent wages, they will have three children for their family again.

1. The Good Old Days of Manufacturing Are Long Gone: Guest Essay. Patterson