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Above is a graph from the St. Louis Fed's excellent data portal which shows manufacturing employment in the US (blue), Germany (black) and Japan (red) from 1990 to 2010 (2011 for the US, note 100 = the series average over 1990 to 2010). The data clearly show that each of these three big manufacturing powerhouses have seen about the same proportional decline in manufacturing employment. Claims that Japan or Germany have not seen the same declines in manufacturing employment as the US are watching wiggles not trends.
The wiggles are important as they can represent the effects of policies aimed at reducing the impacts of recessions. But the trend is important as well, and seeing the same trend in manufacturing employment across three of the world's largest economies is pretty strong evidence that there is a single over-whelming dynamic at play - productivity growth in manufacturing.
Just because it can’t be tabulated in financial terms does not negate our value at home. Being a SAHM is not for those who can’t make it in the “real” world. I will tell you that it takes grit, determination and lots of dying to self to make it as a fulltime SAHM. And who says you don’t need to be an educated mom to handle the demands of SAHM-dom?
The working world is alluring and glamourous and usually financially rewarding. More power to those who are able to juggle work and motherhood and enjoy both. But for the rest of us who are unable or choose not to, think of this season at home as that – a season. When our children are no longer so dependent on us, we can venture out to the workplace once again. Sure, some of us can return to the workforce earlier than others and our season at home varies. But we are most certainly not wasting the country’s or our parent’s money and recourses by being educated to the best of our abilities and then choosing to stay home for our family’s well being.
I was intrigued to see an argument being made in a recent Brookings Institute report (Helper et al. here in PDF) that productivity gains do not lead to job losses in manufacturing. This post explains why I think that this argument is not well characterized and probably just wrong.
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Helper et al. make the following argument (pp. 9-10):
Some argue that strong productivity growth has caused much of America’s manufacturing job loss, especially in the last decade. This theory, which contends that technology is replacing workers, stems from the observation that apparent productivity gains have coincided with manufacturing job loss in the 1990’s and 2000’s. Yet there is no economic reason why increased productivity must lead to job loss.
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The first thing to note is that Brookings is talking about overall productivity gains, and not labor productivity. The different is important. Labor productivity is according to the BLS "is the ratio of the output of goods and services to the labor hours devoted to the production of that output." Overall ("multi-factor") productivity "relates output to a combination of inputs used in the production of that output, such as labor and capital or capital, labor, energy, materials, and purchased business services (KLEMS). Capital includes equipment, structures, inventories, and land." The distinction is crucial to understanding employment changes in manufacturing.
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Right now, American manufacturing is struggling to fill 200,000 vacant positions. There are 450,000 openings in trades, transportation and utilities. The skills gap is real, and it's getting wider. In Alabama, a third of all skilled tradesmen are over 55. They're retiring fast, and no one is there to replace them.
Alabama's not alone. A few months ago in Atlanta I ran into Tom Vilsack, our Secretary of Agriculture. Tom told me about a governor who was unable to move forward on the construction of a power plant. The reason was telling. It wasn't a lack of funds. It wasn't a lack of support. It was a lack of qualified welders.
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We've elevated the importance of "higher education" to such a lofty perch that all other forms of knowledge are now labeled "alternative."
In what is supposed to be a land of unlimited cheap labor — a nation of 1.3 billion people, whose extraordinary 20-year economic rise has been built first and foremost on the backs of low-priced workers — the game has changed. In the past decade, according to Helen Qiao, chief economist for Goldman Sachs in Hong Kong, real wages for manufacturing workers in China have grown nearly 12% per year. That's the result of an economy that's been growing by double digits annually for two decades, fueled domestically by a frenzied infrastructure and housing build-out — one that, for now anyway, continues apace — combined with what was for a time an almost unquenchable thirst for Chinese exports in the developed world. Add to that the fact that in the five largest manufacturing provinces, the Chinese government — worried about an ever widening gap between rich and poor — has raised the minimum wage 14% to 21% in the past year. To Harley Seyedin, president of the American Chamber of Commerce in South China, the conclusion is inescapable: "The era of cheap labor in China is over."
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that doesn't mean that labor costs in China, even in the most expensive parts of the country like Guangdong province, are higher than in most other places, particularly in the developed world. They aren't. The average manufacturing wage in China is still only about $3.10 an hour, (compared with $22.30 in the U.S.), though in the eastern part of the country, it's up to 50% more than that. The hourly cost advantage, while still significant, is shrinking rapidly. For the vast majority of companies, whether small, medium-size or huge multinationals, the decision about where to produce a product is always driven by multiple factors, of which the cost of labor is but one. "For lots of companies over the past two decades, the disparity was such that labor costs often drove the decision," says economist Daniel Rosen, the China director and principal of the Rhodium Group, a a New York City–based consulting firm. "Now, increasingly, that's no longer the case."
“Part of what makes it so difficult to write about labor and the labor movement in the United States,” Kim Voss and Mark Fantasia write in Hard Work: Remaking the American Labor Movement (2004), “is that one is writing about something that inhabits only a microscopic place in the social imagination.”
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Collective action for collective benefit: a pragmatic enough concept that nonetheless feels entirely at odds with our social culture. We have been so thoroughly bred on theories of individualism that we seem to have lost the capacity to imagine anything else. Like workers digging ditches in the 1930s on the taxpayers’ dime, the idea of coming together for a common cause feels quaintly anachronistic.
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“Much of what appears ‘natural’ today,” writes Tony Judt in his posthumous polemic, Ill Fares the Land (2010), “dates from the 1980s: the obsession with wealth creation, the cult of privatization and the private sector, the growing disparity of rich and poor, and above all the rhetoric which accompanies these: uncritical admiration for unfettered markets, disdain for the public sector, and the delusion of endless growth.” He could have added a widespread distrust of organized labor, whose influence has declined dramatically in recent decades. Today, only about 7% of private-sector jobs are unionized in the United States, compared to 20% in 1980. In 1950, labor’s heyday, a full third of Americans working in the private sector were able to count on unions for support.
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As a prisoner at the Jixi labour camp, Liu Dali would slog through tough days breaking rocks and digging trenches in the open cast coalmines of north-east China. By night, he would slay demons, battle goblins and cast spells.
Liu says he was one of scores of prisoners forced to play online games to build up credits that prison guards would then trade for real money. The 54-year-old, a former prison guard who was jailed for three years in 2004 for "illegally petitioning" the central government about corruption in his hometown, reckons the operation was even more lucrative than the physical labour that prisoners were also forced to do.
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"Prison bosses made more money forcing inmates to play games than they do forcing people to do manual labour," Liu told the Guardian. "There were 300 prisoners forced to play games. We worked 12-hour shifts in the camp. I heard them say they could earn 5,000-6,000rmb [£470-570] a day. We didn't see any of the money. The computers were never turned off."
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"If I couldn't complete my work quota, they would punish me physically. They would make me stand with my hands raised in the air and after I returned to my dormitory they would beat me with plastic pipes. We kept playing until we could barely see things," he said.
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Chart 4. GDP per hour worked, 2009
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