NYU Professor: Manufacturing Rebound Won't Fuel Jobs Surge

Monday, 18 Feb 2013 11:23 AM

By Michael Kling

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In his State of the Union address, President Obama said we must focus on creating more manufacturing jobs to power our economic revival.

That won't work, argues one expert.

Manufacturing does not create that many jobs, not all the jobs are good ones, and the work is concentrated in just a few areas of the country, writes Richard Florida for The Atlantic Cities, which is affiliated with The Atlantic.

It's true that American manufacturing is rebounding, but it's an anemic job creator, Florida says.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

Manufacturing output is projected to grow, but that's due to better technology, more robots and automation, and better production organization. It doesn't necessarily mean many more jobs, says Florida, a senior editor at The Atlantic and global research professor at New York University.

The U.S. is projected to will lose another 73,100 manufacturing jobs by 2020 and manufacturing will fall to just seven percent of total employment.

Not all manufacturing jobs are good jobs, contrary to popular perception, asserts Florida. Productions workers averaged $34,220 a year. Pay varies substantially in the sector, from tool and die makers earning $48,710 a year to sewing machine operators averaging $22,630.

President Obama rejoiced over the manufacturing jobs being brought back to the U.S. But many of those jobs pay much less than existing manufacturing jobs, Florida argues, saying new hires make just $12 to $19 an hour compared to $21 to $32 per hour for established employees.

And they're often insecure jobs, vulnerable to business cycles. The unemployment rate for workers in blue-collar jobs increased to 14.6 percent during the economic crisis, considerable more than the 4.1 percent unemployment rate for professionals and the 9.3 percent rate for low-skill service workers.

Manufacturing jobs are concentrated in certain parts of the country. The top 25 percent of manufacturing counties have a fourth of the jobs but just one-eighth of the population, he says, citing a Cleveland Fed study.

And the jobs don't equal economic revival. Areas with many of the jobs typically had slower economic growth.

"It's time for our leaders to stop looking backward, trying to breathe life back into an economy that no longer exists, and develop an economic and job's strategy for the one that actually exists and will shape our future," Florida states.

Florida's argument contradicts many others who praise what they call a manufacturing renaissance. Rising labor costs in China and a boom in shale oil drilling boom are already helping to drive that renaissance, writes financial strategist Martin Hutchinson for Money Morning.

"In fact, since 2010 America has added roughly 500,000 manufacturing jobs, an increase of 4.3 percent," he states. "The economic and investment implications of this reversal are considerable to say the least."

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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