Made in the USA

You’ve heard the rhetoric. “Manufacturing jobs” are returning to America. Between robotics and global competition, what exactly is the reality of manufacturing in the United States? Sure, you can have greater control over quality. Absolutely, those long-distance shipping costs can be reduced. Yes, subtle cultural differences can be corrected. So are Americans regaining their past earning power? Quite the opposite.

If global wage rates for ordinary assembly and manufacturing are still significantly low, how do you take advantage of the above savings and still pay workers within the American wage-rate paradigm? When the automotive industry collapsed with two major bankruptcies – Chrysler and General Motors – union fringes and pay rates across the entire sector plunged as collective bargaining agreements were vitiated. That collapse of prevailing manufacturing pay has continued well into the present day. Simple fact, on any measurement whatsoever: folks who make stuff for the most part make a whole lot less than they have in recent years.

“Even as the White House and leaders on Capitol Hill and in Fortune 500 boardrooms all agree that expanding the country’s manufacturing base is a key to prosperity, evidence is growing that the pay of many blue-collar jobs is shrinking to the point where they can no longer support a middle-class life.

“A new study by the National Employment Law Project [released on November 21^st] reveals that many factory jobs nowadays pay far less than what workers in almost identical positions earned in the past.

“Perhaps even more significant, while the typical production job in the manufacturing sector paid more than the private sector average in the 1980s, 1990s and early 2000s, that relationship flipped in 2007, and line work in factories now pays less than the typical private sector job. That gap has been widening — in 2013, production jobs paid an average of $19.29 an hour, compared with $20.13 for all private sector positions.

“Pressured by temporary hiring practices and a sharp decrease in salaries in the auto parts sector, real wages for manufacturing workers fell by 4.4 percent from 2003 to 2013, NELP researchers found, nearly three times the decline for workers as a whole.” New York Times, November 21^st.

But wait, there’s more. Part of the job creation mythology is that American workers will be the primary beneficiaries of bringing manufacturing back to the United States. Unfortunately, sophisticated automated equipment and robotics have changed the landscape and actually contributed to the heavily skewed wealth polarization we face today. Capital equipment has replaced labor in a vast array of manufacturing, even stepping into arenas where robotics might not be anticipated.

“Home health care workers, food service workers, retail salespeople and custodians will account for nearly 1 million of the 2.4 million new, low-skill jobs expected to be added in the U.S. by 2017, according to a USA TODAY analysis of jobs data from Economic Modeling Specialists Intl. and CareerBuilder.

“But advances in technology mean such workers may be replaced by robots like HERB, the ‘Home-Exploring Robot Butler’ under development at Carnegie-Mellon [University]. HERB is learning to retrieve and deliver objects, prepare simple meals and empty a grocery bag.” USAToday.com, October 24^th.

We’ve seen the massive robotic assembly lines (pictured above) in Detroit, and we know all about 3D printing and nanotechnology. But as automation replaces workers engaged in hand assembly and servicing, the money that used to be paid to labor now is transferred to those who own the capital equipment. And the productivity gains do not go into wage gains; instead they increase the values paid to the owners of the new equipment.

As our access to reasonably-price education dwindles, as our public primary and secondary schools continue to fall in quality teaching, those who are forced back into the manufacturing sector may have jobs, but they are back to living from paycheck to paycheck with little or no hope of living the American middle class dream. Add contract employment and part time jobs to the mix, and the numbers only look good as raw unemployment data. We are witnessing a steep contraction of the middle class and middle class earning power. It’s time to invest in the education, infrastructure and research that can once again accelerate American labor to the top of the food chain they once dominated.

I’m Peter Dekom, and I am amazed how we seem to be willing to cut tax rates for the tiny slice of wealthy at the top at the complete and total sacrifice of everyone else.