Here’s the widely accepted story line about the American economy: Back in the good old days — the 1940s through the mid-1960s — anyone willing to do a good day’s work could land a job in a factory or manufacturing plant. These blue-collar jobs paid fairly well, provided decent benefits and the hundreds of paychecks that such plants turned out each week sustained small towns and cities across much of the Northeast and upper Midwest.
But when unions pushed too hard for higher wages and too generous health insurance and vacation benefits, the tide turned. Throw in overly strict environmental laws, and it was suddenly much cheaper to import running shoes, car tires, calculators and dinner plates from third-world factories where good wages, working conditions and pollution laws were optional.
The transformation from a nation that made things for itself and the world into one that provided services spelled doom for the U.S. economy.
That’s how the story of the decline of the U.S. economy is often told. But the truth is more complicated.
Robert Reich, labor secretary under President Clinton, writes that our image of manufacturing jobs is wrong. “I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots.” But this change is not unique to the U.S., he writes.
Even before the 2008 crash, Mr. Reich notes, 22 million manufacturing jobs disappeared from 20 large economies in the period from 1995 to 2002. The U.S. lost about 11 percent of manufacturing jobs, while Japan lost 16 percent, Brazil lost 20 percent and China lost 15 percent. In the U.S., the manufacturing sector provides 9 percent of American jobs.
But the kicker is that manufacturing productivity is up in these economies. We in Maine should know this, as we watch the paper industry bleed jobs but produce more product than ever before. It’s a trend that shouldn’t produce hand-wringing or celebrating, but rather a reassessment of strategy.
Mr. Reich makes an analogy with agriculture. At the start of the 20th century, 30 percent of American adults worked on farms. Today, fewer than 5 percent do.
“That doesn’t mean the U.S. failed at agriculture,” he concludes. In fact, the nation generates far more agricultural yields than 100 years ago using new technology, innovation in fertilizers and crop management and economies of scale.
Americans should stop pining for the days when millions “stood along assembly lines and continuously bolted, fit, soldered or clamped what went by,” Mr. Reich writes. “Those days are over.” The real culprit? Knowledge.
Creative thinking produced the software and electronic devices that changed our job market. Elevator and telephone operators, gas station attendants, bank tellers and travel agents have all been replaced, to varying degrees, by new technologies.
Still, the manufacturing sector should not be written off. In fact, more than 300,000 manufacturing jobs have been added in the U.S. in the last two years. But as David Wessel of the Wall Street Journal recently noted, even if factory jobs doubled, they wouldn’t erase the job losses from the 2007 to 2009 period.
One more caveat: small and large businesses can make an effort to purchase American-made products. ABC News recently profiled a home builder in Bozeman, Mont., who is committed to using only American-made materials. The materials he uses hail from 33 states. He said that if every builder in the country committed to using just 5 percent more American-made materials, 220,000 jobs would be created.
Protectionist policies and trying to recreate the past are not sound approaches to boosting our economy, even though they appeal to angry voters. Understanding what’s actually happening is the best first step.