The reality of factory work in America

Two terrific articles describe the present and future of factory work in America. The first from the New York Times on Apple’s production system. The second a more comprehensive look at American manufacturing from the Atlantic. Both have the same bottom line: employment in American factories is not now or in the future a major source of job growth in America and the low skill factory work that was the backbone of the American middle class last century that remains here will pay less than in the past. The reason: not politics or policy, but globalization and technology.

At the core of Michigan Future’s work, from our founding twenty years ago, has been the conviction that globalization and technology are mega forces that are continuously reshaping the economy. That by orders of magnitude they are more powerful than politics or public policy. And that the places that will do the best economically are those that align with – rather than resist – what now is described as a flattening world.

In no sector of the economy is that more true than manufacturing. Globalization, of course, means that more and more people across the planet will have the skills to compete with Americans for work. And technology increasingly invents new machines that also compete with Americans for work. Not to mention creating new industries that make obsolete old industries. The two articles do a terrific job of describing how those mega forces are reshaping what factory work can be done in America competitively and for that which remains how it will be structured with fewer workers and more machines.

As the Atlantic article describes the basic facts are:

We do still make things here, even though many people don’t believe me when I tell them that. Depending on which stats you believe, the United States is either the No. 1 or No. 2 manufacturer in the world (China may have surpassed us in the past year or two). Whatever the country’s current rank, its manufacturing output continues to grow strongly; in the past decade alone, output from American factories, adjusted for inflation, has risen by a third. … Yet the success of American manufacturers has come at a cost. Factories have replaced millions of workers with machines. Even if you know the rough outline of this story, looking at the Bureau of Labor Statistics data is still shocking. A historical chart of U.S. manufacturing employment shows steady growth from the end of the Depression until the early 1980s, when the number of jobs drops a little. Then things stay largely flat until about 1999. After that, the numbers simply collapse. In the 10 years ending in 2009, factories shed workers so fast that they erased almost all the gains of the previous 70 years; roughly one out of every three manufacturing jobs—about 6 million in total—disappeared. About as many people work in manufacturing now as did at the end of the Depression, even though the American population is more than twice as large today.

Both articles are terrific at describing the realities of global manufacturing. If you care at all about the future of factory work in America they both are must reads. Both articles explore the calculus companies go through to decide whether to make a product in American or places like Mexico and China. The Atlantic concludes the products that will continue to be manufactured here are precision products and those made in small batches. Clearly many industries – like consumer electronics – are never going to make their products in American again.

The Atlantic article adds a description of the calculus that goes into deciding when to invest in machines to replace American workers. And makes clear that there are machines today that can do even more of the work that American factory workers now do, but for the moment are too expensive to replace relatively  low wage American factory workers. But as the price of the machines go down, more jobs will be automated.

What does all of this mean for factory floor employment in America? The Atlantic article sought answers in a fuel injector plant in South Carolina. As they explain there are two types of factory workers there. Quoting the plant manager: “Unskilled worker,” he narrates, “can train in a short amount of time. The machine controls the quality of the part. “High-skill worker,” on the other hand, “can set up machines and make a variety of small adjustments; they use their judgment to assure product quality.”

The unskilled workers in the plant make $13 an hour. Their job is to work with “machines that can work in only one way and require little judgment from the operator. … Computers eliminate the need for human discretion; the person is there only to place the parts and push a button.” These jobs are still in America as the article describes for two reasons: “First, when it comes to making fuel injectors, the company saves money and minimizes product damage by having both the precision and non-precision work done in the same place. Even if Mexican or Chinese workers could do Maddie’s (a low skilled factory worker) job more cheaply, shipping fragile, half-finished parts to another country for processing would make no sense. Second, Maddie is cheaper than a machine.”

The skilled worker’s job is much different. The article describes a worker that went through two years of education at a community college that included learning algebra, trigonmetry, calculus and computer programming. That prepared him for a job that pays around $19 an hour (50% more than the unskilled workers) and involves overseeing “several machines, performing on-the-spot quality checks and making appropriate adjustments as needed.”

The inescapable conclusion from these articles is that the number of low skilled factory workers in America is going to continue to decline. And what remains will pay around than the $13 an hour that Maddie earns or lower. At the same time there is a need for more high skilled factory workers. Products will still be made here in factories which are increasingly machine driven and staffed by far fewer and higher skilled workers who will make decent incomes.

America faces the twin challenges of too many workers with the skills to do low skilled factory work and too few workers with the skills to do high skilled factory work. Our ability to tackle either challenge is hindered greatly by an unwillingness to accept these realities. Rather we continue to search for how we can recreate the high paid, low skilled, mass employment factory-based economy of the past. Not possible! Factory work in America is going the way of American agriculture: highly productive, with few, mainly higher skilled, workers.

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