Why manufacturing took a hit during the recession? Because it will again.

Can someone explain why manufacturing jobs disappeared during the recession? It seems as though another recession is coming and we need to understand what is going to happen? All I know is a lot of folks lost jobs.

 

I don't believe all these reports that manufacturing is sustainable.

 

One of the major reasons is that corporations were incentivized by tax breaks to move manufacturing jobs to low wage countries like Bangladesh and Vietnam. Another reason is that in the 1980's we moved from being a nation that employed most people in making things to a nation primarily involved in moving money around with the financiers and Wall Street taking their cut each time the money was moved. If you want to understand this you should read Robert Wiedemer's America’s Bubble Economy (2006), Kevin Phillips' Bad Money (2008 ) and Peter Schiff. They all predicted the Great Recession before it actually happened and described pretty much the course it would take.

 

So what are all these reports that jobs are coming back to America?

 

Some of the manufacturers are moving back, they found that shipping costs and lack of highly skilled employees offset the savings. So far it is a small number of manufacturer's and they are using more automation, but the employees need to be highly skilled and very tech savvy so therefore good jobs. We will see if this becomes a trend rather than a testing of the waters.

 

So we have been fed misleadng information yet again.

 

Regardless of what else goes on, barring a nuclear war or something like that we aren't going to turn the clock back to the 1970s where the rest of the world was still getting on its feet after WWII and manual labor was in demand as a draft was on and people were going to college to avoid it. And robotics hadn't really come on the scene so that wasn't an option. It was a crazy time when I believe people with bachelors degrees were making less on average than high school grads. There's a reason income inequality graphs start there.


Anyway, it isn't happening again. Too much of the world can build a factory and even if it couldn't you can just get a robot to do much of it. If manufacturing does come back to the US it'll be smaller numbers of jobs alongside the robots, and you'll need some tradesman skills if you want a decent wage.

 

The world has sped up and we need to keep up to speed. Or inevitably be left behind!! Thanks for your post you make a lot of sense and articulated that very well.

 

Right and wrong. The late 60's and early 70's did see the surplus labor force sucked up into the military due to Viet Nam. And it saw a large number of people go to college (which was generally quite affordable to lower middle class families and up) to avoid as long as possible being drafted. But construction workers made good living wages, so did those who worked in factories. We still made things. Today, most construction workers make about half (after inflation) as to what they made back in 1975. The $8.00 an hour I made as a non union framing carpenter in 1975 would now be $35.49 today. I don't know any framing carpenters that make anything near that today. Most make about $12 per hour. What used to be the middle class is slowly being driven into the lower class.

 

I'm not seeing where we're disagreeing, you're just elaborating on the point. Actually, maybe in whatever it was that I read that construction workers right out of high school made more than the average college grad.

The point of agreement is that the 1970s were the high water mark for unskilled labor, at least if you were a white male (the 70s weren't so utopian for other groups).

Anyway, It's not happing like that again, barring some strange circumstances. Even in construction, we aren't trying to build like crazy accomodate a baby boom in any case homes are increasingly modular and use prefab construction. If the middle class does expand to 1970s levels in won't be due to unskilled construction jobs paying $35 an hour.
Actually I think construction

 

I never thought of it that way. So you're saying our muddle class was not that big originally, but with that low skilled worker need the class boomed. Now that that bubble burst in the last decade it won't expand again in that way. It will have to be another industry like with technology. It wasn't meant to be a boom/ubble, but it turned out to be an industry that wasn't sustainable longterm. Is that where you were going? Maybe you didn't even mean it that way but that seems to be exactly what happened. You can't keep going back to the well on a fake economy. You make your money and run. If the money wasn't made or saved and it is now gone then folks missed their opportunity.

 

Of course manufacturing is sustainable. The problem is, industry and labor unions have created a protectionist labor market which makes manufacturing untenable.

I write this sitting at the train station in Fes, Morocco. In the relative absence of invasive labor laws and a high minimum wage, these people have been able to ensure that the majority of their goods are handcrafted. When you increase the price of manufacturing labor, you increase the price of those manufactured goods and people go elsewhere: in this case to cheap Chinese crap. This is also the reason why there are no longer fuel pump or elevator attendants.

Why were manufacturing jobs lost in the recession? I don't know, but I'd imagine it would be because money became even more tight for most people, and so the cheap Chinese alternatives became more alluring. There are lots of poor looking for work, it's simply illegal for them to have a job.

 

Of course business will go where costs are lowest - that increases profits for them. The banks are the problem (along with monetary policy leaders), but neither side wants to fix the problem. The right wants to ignore it, the left wants to take a cut for their budget.

 

The only major many facturing sectors that have largely moved overseas are galvanizing and foundry and metal casting. These the government shoved out the door by making it all but impossible to run those businesses at a profit in this country one should also note that the raw materials section of the lumber industry is being shoved overseas by rabid environmentalists as well. The rest for the most part died due to modernization. We now manufacture several times as much with roughly a third as many workers and those workers need, in aggregate, less training. 20 years from now, if not sooner, Virtually everything you buy at the store won't have been touched by human hands until you take it out of the package.

 

Because manufacturers reacted to declining demand by reducing the workforce to fit remaining demand for their products. And they look constantly for ways to use technology to replace expensive workers (wages, benefits, time off).

 

After WWII, we saw the rise of a large middle class in this nation. It kept increasing until the mid 1970's, and with the Election of Reagan, it started it's decline. The economic policies instituted by Reagan and continued in large part since, have continued to the long term dissolution of the Middle Class. This is not an accident, it is the intentional policy of the economic elites in this country to hollow out the middle class and turn them back into a near serfdom level of citizen. The downside of this, is that it will end the consumer based economy and wreck the wealth creation that the elites depend on to fuel their lavish lifestyle. Here is a very good read by Nick Hanauer, himself part of the Plutocratic elite. The Pitchforks are coming

 

it wasn't the unskilled jobs that were paying the equivalent of $35 per hour. the Unskilled labor jobs payed IIRC about the equivalent of $12. Carpentry Framer is a skilled job, the next step up would be finish carpenter and then crew foreman.

 

So this was planned? And the jobs that built the middle class were targeted to get folks back in line? Interesting.

 

A rock and a hard place.

 

In a recession, production stalls, business lay people off. People get scared about their future and stop buying stuff. That causes businesses to reign in production even more and lay more people off which creates greater fear and less spending.

 

So basically manufacturing products are elastic in demand and not needed as much as others?

 

How did you conclude that from my statement?

 

It's just a question. If that's not what you meant then ok.

 

I don't know how you possibly think that was what I meant in my post. What does elasticity in demand for manufacturing products have to do with my post?

 

Meaning that the manufacturing products are not things that HAVE to be had. Not like water as an example. So in tough times we won't cut water or liquid out of our lives because we NEED it. Manufacturing products are things we don't have to have and then we cut back during a recession or stop buying them all together meaning factory income goes way down and lots of people get laid off. It's just the laws of economics coming into play.