The Truth about the Manufacturing Sector’s ‘Sickness’


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The U.S. Census Bureau reports that 2011 manufacturing output grew by 11 percent, to nearly $5 trillion. Were our manufacturing sector considered a nation with its own gross domestic product, it would be the world’s fourth-richest economy. Manufacturing productivity has doubled since 1987, and manufacturing output has risen by one-half. However, over the past two decades, manufacturing employment has fallen about 25 percent. For some people, that means our manufacturing sector is sick. By that criterion, our agriculture sector shares that “sickness,” only worse and for a longer duration.

In 1790, 90 percent of Americans did agricultural work. Agriculture is now in “shambles” because only 2 percent of Americans have farm jobs. In 1970, the telecommunications industry employed 421,000 well-paid switchboard operators. Today “disaster” has hit the telecommunications industry, because there are fewer than 20,000 operators. That’s a 95 percent job loss. The spectacular advances that have raised productivity in the telecommunications industry have made it possible for fewer operators to handle tens of billions of calls at a tiny fraction of the 1970 cost.

For the most part, rising worker productivity and advances in technology are the primary causes of reduced employment and higher output in the manufacturing, agriculture and telecommunications industries. My question is whether Congress should outlaw these productivity gains in the name of job creation. It would be easy. Just get rid of those John Deere harvesting machines that do in a day what used to take a thousand men a week, outlaw the robots and automation that eliminated many manufacturing jobs and bring back manually operated PBX telephone switchboards. By the way, if technological advances had not eliminated millions of jobs, where in the world would we have gotten the workers to produce all those goods and services that we now enjoy that weren’t even thought of decades ago? The bottom line is that the health of an industry is measured by its output, not by the number of people it employs.

When Americans buy more goods from Canadians, Chinese and Mexicans than they buy from us, it’s a problem.

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  • Alex Kovnat

    > When Americans buy more goods from Canadians,
    > Chinese and Mexicans than they buy from us, it’s
    > a problem.

    What do you intend to do about this "problem"? Pass local content laws? Increase tarriffs like in 1930 when we had the Smoot-Hawley tariff?

    • 2Anglico

      Dr. Williams has answered all of your questions, many times. Why don't you use some initiative and find out for yourself what he has to say? I will even give you a little help, econfaculty.gmu.edu/wew/

      • RioBravo

        Alex was responding to and raising questions related to theis article. He was not reviewign the life work of the author. Get a clue, 2.

    • kongMing

      >Quoting
      >Not hitting page 2

      ISHYGDDT

  • Amused

    I may be wrong but I think the author is hinting at a Trade Balance ??? At the end of the day , Manufacturing in the US is down NOT because of the things cited by the author , for Modernization has been going on for 60 years and better , that will not change .The fact that we can never compete with Chinese or Mexican manufacturinb as far as cost per unit is simply because in the US we do not pay slave labor wages and the standards for living are higher here than there . The answer lies in US manufactured parts and products that facilitate the changes in technology . Again we relegate THAT to China and Mexico . Switchboard operators will never come back , so lets manufacture electronic switches here .Other than that , fair trade , balanced trade with Chin a and mexico , even tariffs are the answer .

    • ebonystone

      The wage differential between the U.S. and 3rd World countries is only one reason, and not the most important one, for companies leaving the U.S. More important is the endless harassment, and its concomitant expense, by gummint agencies like EPA, OSHA, and EEOC, and their state and local versions. Companies have to spend billions of dollars/yr dealing with mindless regulations. That's if they stay in the U.S. But not if they move to China, Indonesia, Nicaragua, etc.

  • Questions

    Williams is an antidote to the hysteria peddled by such "conservatives" as Paul Craig Roberts, who sees nothing but decline in the manufacturing sector and "Zionism" lurking behind this decline.

  • Guest

    Did anyone besides me notice the word "might" when referring to Japan investing in America?

    All this free trade sounds great but it isn't accurate. Why? Because other countries do not practice FREE trade. They do not have governmental restriction like we do. They are a host of other problems.

    Perfect example of an over simplification of a ver y serious problem.

  • RioBravo

    There seems to be a lack of numbers for a compaison in the article. The author talks about the increase in economic output since last year. Wow, it has increased during a weak economic recovery. That usually happens in a recovery. Then there is a citation of the increase in productivity in manufacturing since 1987 but no refernece to manufacturing output during that time frame. What about the change in per capita manufacturing output since 1987? Does that support the authors case? WHo knows. This article seems to be pointless.

  • sedoanman

    "Just get rid of those John Deere harvesting machines that do in a day what used to take a thousand men a week, outlaw the robots and automation that eliminated many manufacturing jobs, and bring back manually operated PBX telephone switchboards."

    It would be easy: just eliminate freedom.

  • ebonystone

    Nice article, Prof. Williams! I particularly like your reference to the number of phone operators.
    I remember reading 10 or 12 years ago, that if the U.S. was still using 1940-level telecommunications technology to handle the 1999 level of phone traffic, then the enitre adult female population would be working for AT&T (or the other phone companies) as phone operators. Instead, the phone companies employ far fewer people than they did in 1940.

  • faustus

    those numbers include factory output of foreign factories owned by american companies as well and in 2012 the numbers will include numbers from "factorieless" companies such as apple as well.

  • faustus

    http://www.businessweek.com/magazine/content/07_2

    idiots like williams know this but keep putting this bs out….

  • cynthia curran

    Actually, there are alot of customer service call centers that replaced the pbx operator, so the article isn't totally accurate..