A Welcome Rise in Manufacturing Jobs in The USA
3 min read
By Editorial Board of The Washington Post Published: January 12
Crucially, the United States managed that with only about a tenth as many workers as China employed; indeed, swift increases in output per worker are one big reason why this country lost 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. That’s the price of competitiveness.
Of course, in many areas even the most productive U.S. firms could not beat China’s low wages. That has begun to change, as companies return production to the United States from China and other low-wage countries — a trend Mr. Obama labeled “insourcing.”
Again contrary to much rhetoric, “outsourcing,” painful as it was for U.S. workers, was not a nefarious corporate plot. Most of it was a rational response to market incentives, with benefits for businesses and consumers. As recent reports from the Boston Consulting Group show, the return of jobs to the United States from China is also due to market forces: specifically, China’s comparative rise in labor costs.
This may mean that “insourced” manufacturing jobs will not pay the high wages that U.S. factory hands enjoyed during the 1950s and 1960s. In fact, as BCG’s reports emphasized, the greatest competitive advantage for the United States against China belongs to lower-wage, right-to-work states in the South.
Still, the jobs are welcome. Mr. Obama claimed that his policies helped bring them back. His decision to aid and restructure General Motors and Chrysler preserved those companies and the U.S. plants of foreign carmakers too. However, the Federal Reserve’s ultra-low interest rates, and the cheaper dollar they engendered, probably did far more to improve the international competitiveness of U.S. products than, say, the administration’s National Export Initiativedid.
The White House briefing paper that accompanied the “insourcing” event attributes much of the rebound in manufacturing to the boom in domestic natural gas production, made possible by new “fracking” technologies. The federal government didn’t do much specifically to promote fracking. Yet the process has dramatically cut the price of gas, a key industrial input, and led to spinoff employment in related industries. The White House notes that more of such development, appropriately regulated, could have “substantial” benefits to the U.S. economy. Even in a polarized Washington, everyone should be able to agree on that.
