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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One thing to emphasize is that even if manufacturing remains a significant part of our economy, it will employ fewer and fewer workers as manufacturing becomes more efficient. With automation and increased efficiency we will be able to manufacture the same amount of cars that we did at our peak, but that level of production will require fewer workers.
Agreed. Fewer jobs and at lower pay. And because machines will continue to do more of the work humans use to, the skills required to work in factories will keep increasing. All three are the new reality.
Lou, what are your thoughts on the possibility of a much smaller number of factory jobs that actually start requiring a college degree and thus move into the knowledge based job category? Could such jobs actually become higher paying? Is there room in the new economy for a much smaller number of highly educated and highly productive factory workers who actually earn a higher salary? Obviously these jobs would be much different than the low skilled jobs that built Michigan’s middle class in the mid 1900s.
Sure. It is what has happened in aerospace, IT and pharmaceuticals factory work. Very educated workforce, many college educated. Some skilled technicians, others professionals and managers. And they are paid well. Most of the production work is done by machines. So there are not a lot of workers. Completely different from what we think of factory work today.
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