Manufacturing Jobs, Robots, and the Economy

We still make lots of stuff in the United States. China is our closest competitor. The two countries are very close at the number 1 and number 2 positions of manufacturing output.  In the past decade, manufacturing output in the US has risen by a third. What hasn’t risen is the number of jobs in manufacturing. In the last ten years, those have decreased by a third. About 6 million jobs disappeared.

Adam Davidson of NPR traveled to South Carolina to get a better picture of what has happened. In Greenville, he found shuttered textile plants but found lots of hi-tech factories.

The double shock we’re experiencing now—globalization and computer-aided industrial productivity—happens to have the opposite impact: income inequality is growing, as the rewards for being skilled grow and the opportunities for unskilled Americans diminish.

Its going to get worse for unskilled workers. A factory owner puts it bluntly. He is willing to invest in a machine that will earn back its cost in two years. If a robot can do your job, hope that it costs at least twice your salary.

This all leads back to thinking about the Great Recession that come from the 2008 financial crisis and comparing it to the Great Depression. One theory is that the Great Depression stemmed from the movement from agricultural jobs to manufacturing jobs. It’s starting to look like the Great Recession stemmed from the movement away from manufacturing jobs. We were using residential real estate as a piggy bank to help through the transition, but we eventually broke the piggy bank.

The latest numbers from the end of 2011 show some solid signs of job growth and consumer borrowing is on the rise. it seems clear from Davidson’s story that some of the jobs will never come back. It’s more important than ever to invest in education and training.

Sources:

Image of a closed factory is by Rubbertoe

3 Responses to Manufacturing Jobs, Robots, and the Economy

  1. Guy Wiggins January 12, 2012 at 12:13 pm #

    Great Post. I read that article recently and it was very insightful – and frankly pretty scary. The modern factory is so complex and automated that only highly skilled smart people have a chance of making a real living as factory workers. So where does that leave ther rest that just finished high school and don’t have the smarts – flipping burgers at minimum wage? This will just reinfornce the already terrible divide between rich and poor in this country and mean that more and more wealth will get concentrated in fewer hands. It will take an activist government to prevent these economic forces from creating a permanent underclass, but there is clearly not enough political will to do this.

    Thanks for posting this – I hope many people read it.

    • Doug Cornelius January 12, 2012 at 1:27 pm #

      Guy -

      That divide is already here. Look at the latest unemployment numbers broken down by education. http://www.bls.gov/news.release/empsit.a.htm

      Bachelor’s degree and higher: 4.1%
      Less than a high school diploma 13.8%
      High school graduates, no college 8.7%

      It seems clear that politicians should not be talking about jobs, but should be talking about education.

  2. Mike Hodge April 12, 2012 at 1:52 pm #

    Interesting post. It seems clear that automation will continue to reduce the number of jobs in certain sectors of manufacturing. The following article concedes this, but offers the perspective that automation may also open doors to new jobs related to the building and maintenance of robots:     
    http://blogs.ptc.com/2012/04/06/does-increased-automation-steal-manufacturing-jobs/