Factory Work: Summing Up

Most of my posts the past several weeks have been about manufacturing. More specifically what has traditionally been blue collar work done in factories. The Atlantic End of Men? cover story, the Andy Grove Business Week commentary and the New Times article on the skill gap between current factory jobs and those of applicants all at their core are about a group of predominantly male non college educated adults who have enjoyed high wages and now have almost no prospects of either getting their old job back or getting another middle class job without learning new skills. Something they are having a hard time doing as portrayed by both the Detroit News and Lansing State Journal. (See my previous posts on each of these articles.)

Now comes an interesting article in USA Today on some manufacturers bringing factory jobs back to the US from developing countries – mainly China. Good news! Higher transportation costs, low quality, longer lead times, intellectual property theft and rising labor costs are some of the reasons for this encouraging counter trend. Also lower labor cost here are helping. But, of course, that is a mixed blessing. Factory work is now around $15 an hour, not the mid $20s that many factory workers have  gotten used to. The article is quick to point out that this onshoring  still “is a trickle, it is not a flood”.

So where does all of this leave us?  As we have written previously factory work as a proportion of the American workforce is almost certainly not going above its current 10%. Most of the six million factory jobs lost over the last decade are not coming back ever. But factory work also is not going to zero. America will maintain a competitive edge in some areas of factory work. It will still be an important part of the labor market. And with the coming retirement of many Boomer factory workers there will be job openings in the years ahead. But those openings will be for mid skill jobs at moderate pay. Not the low skill/high pay factory work of the past.

The bottom line: fewer jobs, higher skill requirements, lower pay. That is the future of factory work in America. More than likely it means a large group of former factory workers who won’t ever again work in a factory and won’t ever again earn as much. And a shortage of workers with the skills needed for the new factory jobs. So as a country – and particularly in industrial states like Michigan – we will need to wrestle with (1) whether or not to offer an expanded safety net for those faced with a permanent decline in their standard of living and (2) how to attract and train workers for the mid skill/moderate pay factory jobs of the future.

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