Wednesday, November 16, 2016

Jobless Manufacturing

Decades ago, well-paid manufacturing jobs were plentiful. Many people performing these jobs were solidly in the middle class. Recent protectionist talk in the U.S. has given voice to those hit hardest by the loss of these jobs. These people dream of returning to better times. Unfortunately, this won’t happen, but perhaps not for the reasons they think.

Globalization has brought us cheaper goods and has shifted jobs to countries with lower-paid workers. On the whole, these changes have been positive for countries like Canada and the U.S., but localized areas have been hit hard by the loss of manufacturing jobs. Our modern economy has created many new jobs as well, but they require different skills and many of them provide less than middle-class pay.

But it’s important to realize that globalization is only one reason why manufacturing jobs left. Another important reason is automation. Factories are now filled with machines to do jobs that used to be done by people. This trend will not reverse.

If the U.S. becomes increasingly protectionist to the point of blocking the import of all foreign goods, this will spark the return to making goods in the U.S. But every manufacturer’s goal will be to automate as much production as possible and hire as few workers as possible. The amazing technology available today guarantees that these manufacturers would succeed in near-complete automation.

Even if the U.S. closes its border, we will never return to conditions decades ago when well-paid manufacturing jobs were plentiful. The past will stay in the past.

1 comment:

  1. The following exchange is reproduced to remove broken links.

    ----- BHCh November 16, 2016 at 7:34 PM

    Quite. Another reason for exporting manufacturing jobs: unions. You can see it very clearly by comparing what happened to the car industry in Detroit vs southern states like Alabama.

    ----- Michael James November 16, 2016 at 7:41 PM

    @BHCh: Unions certainly increase the cost/unit-of-work ratio. If the border closes to trade, it's certainly possible that the few manufacturing jobs created will be unionized, but automation won't be stopped.

    ----- aB November 17, 2016 at 9:55 AM

    I thought Unions do fight automation, at least to some degree. (not saying I agree, just saying that I thought they do).

    ----- Michael James November 17, 2016 at 10:05 AM

    @aB: Unions certainly do fight automation, and they often have some success. However, that applies to an existing business with unionized employees that tries to introduce new automation. For a new business (or existing business starting a new venture), there is no established union. If they build a mostly automated plant and hire just the few workers they need, there is no union in place to demand that they create extra jobs.

    ----- BHCh November 17, 2016 at 1:06 AM

    And the move will likely lead to a net loss of jobs. Targeted countries are bound to retaliate.

    ----- Michael James November 17, 2016 at 10:09 AM

    @BHCh: This is likely true, but doesn't seem to sway opponents of globalization who dream of going back to the "good old days."