Professor Mark J. Perry's Blog for Economics and Finance
Both series (jobs and output) in the above chart are indexes equal to 100 in 1960. With roughly the same number of U.S. employees in manufacturing as in 1960, the U.S. economy produced almost 4.5 times as much manufacturing output in 2007 as in 1960! It's an often unappreciated, but amazing record of increases in American worker productivity in manufacturing.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
5 Comments:
Having worked in the manufacturing industries, I can personally vouch for the fact that the largest portion of these jobs have gone away for the following reasons:
1. We make things better. You'd be surprised at how many people it takes to make low quality products.
2. We use machines and automated systems a lot more than we used to, especially for highly repetitive tasks that no human really wants to do in the first place.
3. It takes a more highly-skilled person to make the stuff we make today than it did in the past. Right now, U.S. manufacturing industries have a huge shortage of people with the education and training on high-tech systems it takes to operate a modern production line.
4. By numbers that I suspect dwarf the number of manufacturing sector layoffs, most of the jobs that have been "lost" in manufacturing are actually jobs that have never existed.
As we've gotten better at making things with higher levels of quality and less waste, on highly automated production lines that require a lot less people to operate, run by highly skilled technicians, mechanics and machinists, why on earth should we have to hire more people than we really need?
ironman I find it fascinating that Hamill Manufacturing, one of the manufacturers that whines about a shortage of workers only has one (1) job opening posted on their website.
http://www.hamillmfg.com/careers.htm
What's up with that?
For a company that whines that they can't find enough skilled workers in the US they sure aren't looking too hard for them.
Ironman,
I work in manufacturing, too. I second your observations. We ship as many tons of finished products today with less than 1/2 of the workers we had 20 years ago. The jobs that the machines took away were the type of jobs that turned young men old quickly.
Spending so much time worrying about the jobs that the Japanese, Chinese . . . “stole” from us takes away valuable resources of figuring out how to do whatever we do the best we can.
anonymous:
Unfortunately, I can't speak for Hamill Manufacturing's particular situation. Speaking generically though, there's a difference between short term needs and medium to longer term needs for highly skilled workers.
In the short term, manufacturing companies hiring needs are driven by their current workloads and how many people they already have on hand to do the work. For instance, companies can stretch their ability to do work with fewer people by having their current staff take on some overtime hours, but all well-run companies recognize that's a short-term solution at best, particularly in the highly competitive environment for highly skilled workers that already exists today.
Once you start looking medium to long term though, then you take into account things like the age of the people who work for your company and when they might choose to retire.
In a lot of well established companies and shops, there's a higher concentration of older technicians and machinists, largely as a result of what I've previously described - they were hired in larger numbers years ago, but the number of subsequent hires has been reduced as the companies have become much more productive.
For a lot of companies in this situation, which I suspect Hamill may fall into, they're looking at the prospect of having to keep meeting their current and future contracted production volumes as a large chunk of their experienced workforce is getting set to move into retirement over the next several years.
As a result, you won't see a single mass hiring event, but you will instead see a continuous stream of positions come open for hiring - paced by when the people currently filling the positions vacate them as they hit the age at which they'll opt to retire.
And that may help explain why you only see Hamill Manufacturing listing just one position on Friday, 14 March. Check their site frequently to see the stream of direct hiring, and see if you can find out if they're also doing contract recruiting, as a number of manufacturing outfits do seek to fill permanent positions through a variety of job shops through contract-to-hire positions.
"It takes a more highly-skilled person to make the stuff we make today than it did in the past."
OTOH, I haven't overtly seen, in the products, the kind of quality materials, craftsmanship and durability in products made more recently as those made in the past.
If you think about it, there's a good economic reason for part of this. If it "costs less" in labor to make and replace, then the economic value of durability is much less.
OTOH, our precision has increased, tolerances decreased -- from 0.001 inch tolerances in the 1940s to 0.0005 inch in some goods, and down in the 5 nano-meter range for electronics.
There is a glut of people educated and trained on the high-tech systems it takes to create the components of a modern production line, but our best precision machine tool firms have gone out of business, or moved to specialties like making cooling solutions.
Before the USA's official entry into WW2, they geared up, hiring tens of thousands of house-wives and farm laborers and, with a month of two of training, turning them into machinists to manufacture tanks and planes, and, in particular the precision parts for the engines.
What I read into your (plural) comments is that the executives are now unwilling to invest in education and training of US citizens. Unlike the 1980s, they're also unwilling to fly US citizens in for interviews, or to relocate them, but quite willing to relocate cheap, more servile guest-workers.
Companies with well-known names have been receiving thousands of resumes per month since before the Clinton-Bush-Obama economic depression began in 2000. Job ads lack human contact names, e-mail addresses, and voice phone numbers because they're inundated and building up the barriers, with web-form driven resume parsers backed by crude data-bases, but body shopping is all the rage.
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