On any weekday morning 50 years ago, men and women in cities and towns across Maine and the nation could be seen filing through factory gates or up the steps to a mill or plant. Manufacturing was king. Americans made things the rest of the world wanted. And blue collar workers and their paychecks were the foundation of American prosperity.
The popular perception is that this era is over, and more is the pity. Such a pronouncement misses the more complex story.
A statistical milestone noted in the news last week was an emblem that many seized upon to further lament the demise of our manufacturing glory days. For the first time, health care jobs exceeded manufacturing jobs. The trend lines are clear and unrelenting.
So instead of making things and selling them on the world market, more Americans will earn their living caring for our sick and elderly. And that care is paid for by our tax and insurance premium dollars. That can’t be good, right?
Laurie Lachance, former Maine state economist and current CEO of the Maine Development Foundation, says the state’s numbers mirror the national trend. In 1990, 17 percent of Maine jobs were in the manufacturing sector, while between 7 percent and 8 percent were in health care. Today, less than 9 percent are in manufacturing and about 16 percent are in health care.
“There has been an exact flip-flop,” she said.
But declaring this development good or bad is not the right call, she believes.
Manufacturing employment is declining because of innovations in technology. In fact, manufacturing productivity — the amount of things made — is up. This is good news in the long term, Ms. Lachance says. Manufacturers have invested in technology and equipment so fewer people are needed.
“That is better overall,” she says, and is preferable to using public funds to prop up a mill whose owner failed to keep pace with those investments.
Manufacturing jobs make up 8.6 percent of total employment in Maine, but Ms. Lachance says the sector’s effect on the gross domestic product is closer to 13 percent. That comes in higher-than-average wages, commensurate with the higher-level skills needed, and profits.
A return to the good old days, when a large chunk of the labor force worked at low-skill, lower wage jobs, “is not a formula for prosperity,” she said.
Health care and manufacturing may have little to do with each other, and the contrary trend lines should not be interpreted as cause and effect. As Maine endured the recession, growth in health care jobs has been “an amazing godsend,” Ms. Lachance says. But ultimately, a greater reliance on health care jobs is unsustainable, because those jobs are paid through taxes and insurance premiums.
And Maine has a high reliance on health care jobs. “We are far above the U.S. average,” she said, and yes, there is a tipping point at which those jobs represent a drain. Health care does not introduce new dollars into the state, with the exception of medical research, such as that of Jackson Lab, and construction of new facilities.
Workers squeezed out of manufacturing jobs may not easily transition into health care jobs. And last year, the first baby boomers turned 65. More than 70 million are behind them in line for care. These represent serious challenges.
The industrial revolution is over. Or, at least the version that was characterized by hundreds of workers at factories, plants and mills. Knowing what will replace it is critical for state and national economies to prosper in the new paradigm. We must, quite literally, invent our economic future.