"Why We Should Root for a Manufacturing Resurgence: Nations that Build Things Build Wealth," Christy Roix Daggett
One bright spot in this unending campaign season is that American manufacturing has been brought to the front and center of the political debate. This only means that politicians are catching up to the concerns of their constituents; protecting American manufacturing jobs has been a priority of the American public in poll after poll.
Until now, the public’s concerns didn’t resonate far beyond the pollsters’ telephone banks. Instead, the United States has entered into numerous trade deals, often with developing countries with few labor or environmental protections — a recipe for American job loss and exploitation of workers abroad.
It was promised that the North American Free Trade Agreement would create 200,000 American jobs. Instead, 682,900 jobs have been lost. When the U.S.-Korea Free Trade Agreement was negotiated, 70,000 jobs were promised tied to increased exports. Instead, U.S. exports to South Korea immediately fell, and 60,000 jobs went with them. The decline in manufacturing has been especially hard on American men in their prime working years. Pre-NAFTA, 92 percent of such men were in the workforce. Today, 12 percent of prime working-age men are not in the workforce — they are not working, and they have given up looking for a job.
This is important for a state such as Maine, where nearly 35,000 private sector workers are employed in the production sector. Wages in production remain high — the median nonmanagerial manufacturing wage in Maine is $16.61 per hour. Notably, manufacturing’s regional economic multiplier effect is one of the highest of all employment sectors. One analysis in the northeastern U.S. found that for every manufacturing job in a region, another 3.04 jobs were supported, whether further down the supply chain or at a coffee shop outside a plant. Compare this to recreation and hospitality, which has a weak multiplier effect of only 1.50.
Unfortunately, nearly 33,000 manufacturing jobs have been lost in Maine since NAFTA took effect. And the rate of Maine students eligible for free or reduced-price lunch — a marker for families growing up in the ranks of the working poor — has increased from 31 percent in 1999 to almost half of schoolchildren today.
Now that the critical importance of manufacturing has entered the political dialogue, this is a time to promote policies that protect the jobs we have and that could grow more in the future. First, invest in the infrastructure it takes to get goods to market, and the internet it takes to sell them near and far. No single firm can solve the barrier presented by crumbling American infrastructure; this is a public investment that is critical to job growth.
Second, protect and build a skilled workforce. American manufacturing workers are among the world’s most productive. China produces slightly more goods but requires 10 times the workers to do so. To capitalize on our skilled workforce, the federal and state governments have promoted apprenticeship in recent years. Apprenticeship offers a critical tool to ensure people “earn while they learn” and that the considerable knowledge of manufacturing workers — many of whom are highly skilled and due to retire — is passed on to the next generation. Maine also is a leader in introducing career and technical education at the secondary level and bridging vocational learners over to the postsecondary level. We should keep it that way.
Third, continue to invest in innovation and research and development but keep the jobs here. The U.S. private and public investment in research and development is twice that of its nearest competitor. But the trade deficit in advanced technology products — once a safe harbor for manufacturing — has ballooned since 2002. The $91.5 billion deficit in advanced technology products alone now exceeds the net foreign earnings from royalties and fees booked by all U.S.-incorporated companies. Creating technologies here and then letting them be manufactured abroad is not a recipe for long-term, widespread prosperity.
During the early 20th century, when workers moved from the family farms to take jobs in plants, American agriculture was not abandoned and left to decay, as too many industrial parks and mills are today. Instead, the economy grew strongly during the 20th century, with both sectors in concert. It’s not retro to root for a resurgence in American manufacturing: It’s rational. Across economic history, it’s been demonstrated that the nation that builds things also builds wealth. Let’s keep building things.
Christy Roix Daggett is a member of the Maine Citizens’ Trade Policy Commission.