Manufacture This

The blog of the Alliance for American Manufacturing

There’s been a bit of recent news coverage looking at the rise in higher paying jobs, including manufacturing. The Washington Post is out with a story today noting hiring “has picked up steam in areas such as construction, manufacturing and professional services in recent months,” while Reuters published a story headlined: “Robust manufacturing output buoys U.S. economic outlook.”

Here at the Alliance for American Manufacturing (AAM), we’re always happy to see headlines offering a positive take on the future of U.S. manufacturing. But once again, we caution it is far too soon to declare victory — we’ve still got a long way to go toward a full manufacturing recovery.

So let’s break things down, looking at both the good news and the bad news behind the headlines.

Good News

The number of new manufacturing jobs has indeed increased over the past three months. As our AAMeter shows, 15,000 new jobs were created in May, followed by 23,000 in June and 28,000 in July. The increase in July was the largest jump since November 2013, and only the second time that monthly manufacturing job growth met or exceeded the pace needed to meet President Obama’s goal of creating 1 million new manufacturing jobs by the end of his second term.

Reuters reported that manufacturing growth is happening in many areas, particularly the auto industry:

The Federal Reserve said factory production jumped 1.0 percent last month after rising 0.3 percent in June. That was the largest gain since February and reflected increases across all major categories. Auto production surged 10.1 percent, the biggest rise since July 2009. There were also sturdy gains in the production of machinery and computers and electronic goods, which economists said hinted at a pick-up in business investment this quarter.”

Bad News

Progress is happening far too slowly. Only 195,000 new manufacturing jobs have been created since President Obama’s second inauguration — meaning he is still more than 800,000 new manufacturing jobs away from reaching his goal. If job growth had been on a steady pace since January 2013, about 400,000 new manufacturing jobs would have been created by now.

As economist Sam Coffin told the Post:

Coffin said low-wage sectors tend to grow faster during the first two years after a recession before other industries catch up. But it’s been five years since the recession ended, and his research shows that higher-paying jobs began to outpace others only in the past three months.”

It’s also worth pointing out that while the private sector has recovered all of the jobs lost during the Great Recession, manufacturing is only about 30 percent of the way back.

That gap is creating a negative impact. The nonpartisan U.S. Conference of Mayors pointed out in a report released just last week, the lack of good paying manufacturing jobs is creating an income gap that has been both tough on workers and a drag on our economy.

In order for Obama to meet his 1 million goal, more than 27,500 new manufacturing jobs will need to be created each month. It happened in July — but can that pace keep up?

More Good News

We don’t have to just wait-and-see whether the manufacturing industry makes a full rebound. There are things we can do now to provide a boost.

Investing in our infrastructure will create jobs — about 20,000 for every $1 billion invested — while also laying the foundation for future economic growth. Making sure all infrastructure projects include Buy America provisions also will create jobs and support U.S. manufacturers.

Meanwhile, the President and Congress need to work together to enforce our trade laws and end currency manipulation, the latter of which could create 5.8 million jobs in three years.

If we can get the policy right, we’ll see continued manufacturing job growth, build a stronger economy, and create a more secure future for the entire country.