Excellent rant on the Manufacturing myth. Not for the Unionized.
The Myth of the Manufacturing Job
What is a manufacturing job?
You would think that all this country needs is more "manufacturing jobs" and we would have 0% unemployment, no National Debt, everyone would be secure and happy, and we could move the national discourse to more important things...like the maturation of Mary Kate and Ashley.
"Manufacturing Job" is largely a liberal code phrase for "heavy industry, mega-company, big factory, full-health-care-coverage-for-the-smoking&overweight, generous pensions, old world, heavily unionized, low productivity, north-eastern, upper mid-west, old-mill town-south, democratic voting" job
[Note: "Manufacturing Job" will be defined as noted for the rest of this essay]
Does anybody reasonably believe those jobs would, could, or should be created anymore? How would a competitive global economy sustain such costly employment. John Kerry could cut corporate taxes to 0% and those jobs will never come back.
There is a myth that Big Company, Big Union "American workers" are the most productive in the world. The truth is that our industrial managers, our design and manufacturing engineers, and our supply chain managers make their companies the most productive in the world...largely through shedding those types of fantasy jobs through driving competition (should we make it here or there? or should we source it?) and technology improvements (more manufacturable designs, factory redesign, automation and control).
Consider this data from Bruce Bartlett
It is true that U.S. manufacturing employment has fallen sharply as a share of total employment, from 41 percent of all employment in 1950 to 20.1 percent in 1998.
People also focus on manufacturing because of its sharp decline as a share of total output. In 1950, the production of goods accounted for 55 percent of the gross domestic product (GDP). By 1998, that figure had fallen to just 36.5 percent.
But this analysis looks at output in nominal (money) terms without adjusting for price changes. This is important because prices for manufactured goods have fallen relative to prices for services.
Looking at real (inflation-adjusted) goods production as a share of real GDP, one sees that not only has manufacturing not fallen, it has increased its share of GDP.
In 1950, real goods production accounted for 37.3 percent of real GDP, according to the Department of Commerce; last year it accounted for 39.8 percent.
Please read the next line twice
Indeed, manufacturing hit its lowest share of real GDP in the early 1960s -- the "good old days" for many people -- and has risen almost continuously since.
When output rises while employment falls, the result is an increase in productivity. And according to the Labor Department, U.S. manufacturing productivity is now higher than in any other major country
Thomas Sowell offers a historical analogy showing the relationship between Agricultural Productivity and Farm Employment
The Country is far better off without those ultra-secure "Manufacturing Jobs." If your average, unmotivated, unskilled person can not find a gravy-train life long job in the 21st century as easily as they did in the 20th century...isn't that progress?
Am I being to cruel? Try this Thought Experiment:
You are starting a business. You need highly motivated, flexible people who pay attention, learn, and yes, God Forbid, sometimes take direct orders and follow through precisely without complaining or whining. You need people who will get along with others without sowing discord, without letting petty rivalries, bigotry, ethnicity, or stupid B.S. get in the way of achieving the only true mission of the company: satisfying customers and generating profits.
So pick 100 people of working age at random in the US for your hiring pool. Do you really think more than 10-20% of them fit the completely realistic needs described above? At best you'll get some great employees, and you'll get a decent solid majority-in-the-middle who, nevertheless, need leadership to be effective. You will be in a critical race against time. Can you weed out and fire the loud-mouth, lazy, losers before they infect the solid middle players?
And yet even if you could clone the perfect worker, you would still have a tough road competing globally. Furthermore, jobs are much more expensive than they once were (Workman's Comp, Health Insurance, OSHA, other regulations). Here's an excerpt from a note I sent to Virginia Postrel.
All of the [Sarbanes-Oxley] costs are going to be amortized on employees...so we've made it even more expensive to hire people. Already, we put aside nearly 40 cents on the dollar for every employee we hire for benefits, pension, healthcare etc. How long until that is dollar for dollar? Are you kidding me?
The structure costs of business reporting are brutal also. I am sure you've seen the report from Emerson on US competitiveness.
And frankly, people can be a pain in the rear. At 5.6% unemployment, you just can't convince me or any of my peers that the people out there looking for work are top notch...and as expensive as it is to hire someone, we want the best. Otherwise, you'd be surprised how well you can get by without someone, especially someone of mediocre professional value.
Does anyone realistically believe that a 5% unemployment is bad? Do we really think 5 out of those 100 people in the example above deserve to have a job at all? Think about it? Out of every 100 people you meet, you would hire all 100 of them if you were paying the bills?
I bet not..you'd find a way to make due with 95.
I've managed a basic low tech shop that had SIX DIFFERENT UNIONS to perform an array of so-called "specialized" tasks. If a "machinist" was undoing a latch to work on a mechanical assembly, he had to wait minutes or hours for the "electrician" to remove two wires. This wasn't an exception, nor was it abnormal. But what most people don't realize is that these are what some people call "good manufacturing jobs which are good for America"
Union contracts are not negotiated with the market or with the consumer. They are negotiated with the "selfish" middleman - "Upper Management." Unions expect management to offer them a stability which doesn't exist in the market. Maybe it did 50-75 years ago..but it doesn't now.
"Manufacturing Jobs" are therefore jobs that are "shielded" from reality. That's why they don't grow like the rest of the economy. Who wants to bet free market capital on a fantasy?
It also explains why the most strong and stable unions are public government sector or "trapped" private industries like mining and railroads. There isn't exactly robust global competition in railroads so they can pass the unproductive costs directly to the market. So every Class I railroad in this country is among the most unionized companies in the world. They even have a separate Federal Labor Relations Board and a separate Federal Retirement scheme in addition to a company pension.
What start-up company in the US today has a goal of employing hundreds or thousands of those type of employees?
John Kerry's endorsers don't care two hoots about the vibrant new companies with 5-25 manufacturing jobs? Hillary holds them in contempt for being undercapitalized and the AFL-CIO isn't interested because the workers at those firms have no interest in sending part of their paycheck to bloated bureaucracies with a history of corruption.
Someone has called Ford and GM companies that sell cars to finance their Healthcare and Pension businesses. It's true. They sell most models at a loss and mainly generate profits because of (bad) rich people buying (bad) SUVs and (bad) luxury cars.
What is it about politicians that deride companies but praise the "manufacturing jobs" those companies create? And ultimately those companies develop a collective regret for ever creating these "Manufacturing Jobs" as they become a lifelong burden that each year gets more expensive and less productive.
The more you think about it, the more you get the Atlas Shrugged Syndrome. |
