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Manufacture This

The blog of the Alliance for American Manufacturing

Here we go again: It’s time for another installment of AAM Mythbusters, in which the Alliance for American Manufacturing (AAM) explains that technology is not the reason we’ve seen a decline in American manufacturing jobs.

Background.

There’s been a bit of chatter on the Internet this week from pundits arguing that technology is to blame for the loss of manufacturing jobs. They theorize that technological advances continue to lead to job reduction.

On Monday, Matthew Yglesias penned a piece for Vox arguing that a new exoskeleton produced by a South Korean company to help shipyard workers is why manufacturing has become a “niche occupation” in the United States. (Note: Calling an industry that employs roughly 12 million Americans “niche” seems a tad overwrought.)

Then on Thursday, Will Oremus at Slate published an article studying the potentially negative job impacts of machines that can automate work in ways that were once impossible. Oremus ponders: “When even high-skill 'knowledge workers' are at risk of being replaced by machines, what human jobs will be left?”

Myth: Busted.

Yglesias and Oremus both put forth the basic argument that technology leads to increased efficiency, and that increased efficiency leads to a decline in jobs. And look, there’s no doubt technology has increased efficiency.

But efficiency alone is not to blame for the United States losing millions of manufacturing jobs since 2000. After all, while we’ve seen manufacturing declines here at home, the sector is absolutely booming abroad — and unfair trade (including dumped product), massive foreign subsidies, and currency manipulation are major factors.

Take one of the greatest technological advances of our age, the mobile phone. As Richard McCormack writes in ReMaking America:

There were 1.75 billion cell phones made in the world in 2012. In one hour, 199,635 mobile phones were being produced globally, or 3,327 per minute. Not one of those phones was made in the United States… It is projected that by 2017 the total number of cell phones made each year will be 2.6 billion, or almost 300,000 phones per hour. That is a lot of jobs making what is, in effect, a supercomputer.

It’s not just phones, McCormack points out. Americans invented crystalline solar photovoltaic (PV) cells, which allow sunlight to generate electricity. In 2011, the United States produced just 1.5 percent of global production of PV cells. Meanwhile, massive government subsidies allowed China’s share in the global market to hit 64 percent.

Technology IS creating new jobs, and a lot of them. Just not in the United States.

Most people understand manufacturing has moved overseas. But why in such massive numbers? America’s trade policy with China is one big reason, economists Justin Pierce and Peter Schott argue in The Surprisingly Swift Decline of U.S. Manufacturing Employment:

This paper finds a link between sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade.

Governments like China subsidize their manufacturing industry (and often when paying workers low wages, ignoring safety and environmental regulations, etc.)  Many of these countries also manipulate their currency. And when the United States doesn't do anything about it, jobs move overseas. 

Reversing the Trend.

Advancing technologies can lead to more manufacturing jobs in the United States. We just need to make sure we have the right policies in place and do the right things. Here are some ideas:

  • Get Serious About Currency Manipulation. Ending currency manipulation could create up to 5.8 million manufacturing jobs. Every state and almost every congressional district would see job gains.
  • Enforce Trade Laws. When foreign companies dump product into the U.S. market, it is essential that Washington enorce laws that are already on the books.
  • Be Smart About Future Agreements. Americans are clear about foreign trade — they want the United States to take steps to prevent currency manipulation when negotiating trade agreements.  Policymakers should listen, and not enter into agreements that could further put U.S. jobs at-risk.

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