Oddly, Manufacturing is Up...

[IndependntLogic]

What do we make of this?

Reuters:

The Institute for Supply Management said on Monday its index of
national factory activity rose to 51.6 last month from 50.6 in August.
September marked the 26th straight month of expansion in a sector that
has shouldered the broader economic recovery.
Economists polled by Reuters had expected the index to edge down to
50.5. A reading above 50 indicates expansion manufacturing.
A measure of factory employment rose to 53.8 last month from 51.8 in
August, while production climbed to 51.2 from 48.6.
Part of the long term rise in factory activity is a result of a weaker
dollar, which makes American exports more attractive overseas. And
there is no guarantee that what the factories are making will not
simply end up as unsold inventory.
But for the moment, the industrial sector appears to be one of the
only bright spots in a gloomy economy.


I mean obviously, with so many jobs shipped overseas or replaced by robotics, we'll never have the same percentage as we did in the 70's but this caught me by surprise.

 

[expat_panama]

...so many jobs shipped overseas or replaced by robotics, we'll never have the same percentage as we did in the 70's...

Please share with us what was it in the 70's, or if you're making it up let's look together at the actual numbers.

There's a lot of evidence that over the decades American factories have produced more with less, resulting in greater well being for all. A job is not something that can be packed in a crate and 'shipped overseas'. That's crazy. Productivity is a good thing. In real life a factory that's more efficient and can make more goods and better goods with fewer man-hours ends up hiring more people than the factory that produces fewer goods of lesser quality.

 

[Dragon]

That the U.S. has lost manufacturing capacity or "no longer makes things" is a myth. We have lost a lot of manufacturing JOBS, but we still make as much as ever measured by value-added. The jobs have been lost to a combination of outsourcing and automation.

It wouldn't be a problem except that the government adopted a labor-unfriendly attitude at the same time, making it prohibitively difficult to unionize the service jobs that have taken the place of the lost manufacturing jobs. The solution isn't to bring the manufacturing jobs back; for the most part we can't do that, any more than we can bring back the agricultural jobs that most people worked at before agriculture was automated. The solution is to empower service workers, because that is what most of us are going to be for the foreseeable future -- or at least until service jobs are automated out of existence, too.

 

[Wiseacre]

Whoop-de-do. Good that it's not going down, but since the 51.6 index is not all that much higher than 50, which is the cutoff for determining manufacturing expansion, I'm not overly impressed. Doesn't sound like a double dip is coming, based on this number, but we aren't that far removed from it either.

 

[expat_panama]

...jobs have been lost to a combination of outsourcing and automation...

No they haven't. Over the decades factory output has soared and so has employment. The trend is over time Americans work smarter with fewer grease monkeys and more engineer/programmers.

 

[Dragon]

No they haven't. Over the decades factory output has soared and so has employment. The trend is over time Americans work smarter with fewer grease monkeys and more engineer/programmers.

The number of engineers and programmers required is far less than the number of grease monkeys that used to be. Manufacturing employment has NOT soared. It has sharply declined (as a percentage of the total work force), even as factory output has indeed increased.

Here: Midwest Economy: Is U.S. Manufacturing Disappearing?

Manufacturing employment as a share of total employment in the United States has been declining over the past 60 years. In 1950, nearly 31% of nonfarm workers were employed in manufacturing. Since then, the share has been dropping three or four percentage points per decade, falling to 28.4% in 1960, 25.1% in 1970, 20.7% in 1980, 16.2% in 1990, 13.1% in 2000, and 9.1% in 2009. Even with this downward trend in manufacturing’s share of jobs, employment in manufacturing has on average been fairly stable over the past 60 years, averaging a decline of –0.1% per year. In contrast, the growth of nonfarm employment averaged 1.9% per year, and this led to the reduction in manufacturing’s share of jobs.

By 2006, the U.S. economy employed about as many workers in manufacturing as in 1950, just over 14 million. And so, looking at manufacturing employment alone leads one to believe that the sector is in decline or at best stagnant.

However, a very different conclusion emerges if you focus on the amount of goods being produced by the manufacturing sector. While employment has changed very little over the past 60 years,[3] output in manufacturing has increased at an annual rate of 3.4%. Manufacturing output in 2007 (the recent peak in manufacturing output) was over 600% higher than in 1950.

So it's just as I said, factory output is higher than ever, and America is not, as myth would have it, a country that no longer makes things. We're just a country that makes things very efficiently, employing far fewer people per unit of output than we used to.

Outsourcing is only partially the cause. At least as much is due to improved equipment and methods -- automation, in other words. Jobs lost to outsourcing could conceivably be brought home, but that would be a temporary gain; cheap foreign labor is cheaper than the automation that would replace it, but expensive American labor is not.

We are never going to see most of those manufacturing jobs again. They've been replaced by service jobs, and so what we need to do if we want to see wages like in the past is to empower service workers, not mourn the loss of grease-monkey jobs.

But the real crunch will come as service jobs are automated, too, as is already happening. When agriculture, manufacturing, and services are all automated, we will have a permanent dearth of jobs, an ability to produce goods and offer services with only a bare skeleton crew of people.

It's an interesting political and economic question what will happen when jobs become permanently and irreversibly scarce.

 

[Katzndogz]

I'll buy something made in another country before I buy something union made here.

I despise unions.

 

[expat_panama]

...The number of engineers and programmers required is far less than the number of grease monkeys that used to be...

The idea is to actually look at the numbers before deciding what they are.

...Manufacturing employment has NOT soared. It has sharply declined...

Of course it has, that's what my post was saying. Our factories produce more goods at higher quality and the former grease monkeys are now engineer programmers. Here's the breakdown for trends over the past few decades:

Manufacturing output is up.

Factory workers needed is down.

Technical service jobs needed for factories is up.

Total employment is up.

Average incomes are up.​

Hey, if you disagree don't argue with me, tell it to bea.gov and bls.gov.

 

[Trajan]

That the U.S. has lost manufacturing capacity or "no longer makes things" is a myth. We have lost a lot of manufacturing JOBS, but we still make as much as ever measured by value-added. The jobs have been lost to a combination of outsourcing and automation.

It wouldn't be a problem except that the government adopted a labor-unfriendly attitude at the same time, making it prohibitively difficult to unionize the service jobs that have taken the place of the lost manufacturing jobs. The solution isn't to bring the manufacturing jobs back; for the most part we can't do that, any more than we can bring back the agricultural jobs that most people worked at before agriculture was automated. The solution is to empower service workers, because that is what most of us are going to be for the foreseeable future -- or at least until service jobs are automated out of existence, too.

It wouldn't be a problem except that the government adopted a labor-unfriendly attitude at the same time, making it prohibitively difficult to unionize the service jobs

how so?

 

[waltky]

Obama gonna run `em outta town if dey don't get with the program...

Obama to GOP: Act on jobs or get run out of town
Thu Oct 6,`11 : WASHINGTON – A combative President Barack Obama challenged a divided Congress on Thursday to unite behind his jobs bill or get ready to be run "out of town" by angry voters. Hoping to use public frustration and economic worry as leverage, he called his proposal an insurance plan against a painful return to recession.

In a news conference long on restatements of his ideas, Obama laid bare the dynamic that now is Washington: The era of compromise is over. Frustrated over getting nowhere with Republicans, Obama demanded that they explain themselves to the country and promised to keep "hammering way until something gets done." Despite Obama's taunts, Republicans showed no signs of switching positions. Instead, they pressed unsuccessfully for a symbolic vote later in the day so they could demonstrate their opposition to the bill the president submitted three weeks ago. They also predicted they would prevail next week when Democrats try to advance a reworked version, which Obama supports, with a tax on millionaires.

Speaking at a forum just about the same time as Obama, House Speaker John Boehner said the president had decided to "give up on governing, give up on leading." Said Boehner: "We're legislating. He's campaigning." Obama's news conference marked a continuation of his recent feistiness, and his party's pre-election-year attempt to depict Republicans as protectors of the rich at the expense of the jobless. Obama plans to keep it up through his campaign as he seeks a second term amid persistently high unemployment.

Lamenting political gamesmanship, Obama defended his own tactic of campaigning for a jobs bill that appears to have no chance of passing as it is. When asked about his willingness to negotiate to help the millions of unemployed, he said he had gone out of his way every time with Republicans, to little avail. "The question, then, is, will Congress do something?" the president said. "If Congress does something, then I can't run against a do-nothing Congress. If Congress does nothing, then it's not a matter of me running against them. I think the American people will run them out of town, because they are frustrated."

Obama conceded that voters have grown deeply exasperated and cynical, and he put the responsibility largely on Congress as unresponsive to public opinion. At one point Obama even told his media questioners to accept a "little homework assignment" and "go ask Republicans what their jobs plan is." The political positioning came with the American economy weakening and at a risk of sinking as a consequence of Europe's debt crisis. Nearly one-third of the unemployed people in the United States — almost 4.5 million people — have been out of work for a year or more.

MORE

See also:

Obama Says Jobs Plan Can Grow GDP as 'Much as 2%'--But WH Estimates It Will Cost 3%
October 6, 2011 – At a White House press conference on Thursday, President Barack Obama said the legislation he has proposed to create jobs could "grow the economy as much as 2 percent." However, the White House estimates that the plan itself will cost $447 billion -- or 2.97 percent of the 2011 GDP of $15.012 trillion that is currently projected by the federal Bureau of Economic Analysis.

The president also said at the press conference that his plan could create "as many as 1.9 million" jobs. If that is true, based on the plan's estimated $447 billion cost, those jobs would cost an average of $235,263 to create. “Go ask the Republicans what their plan is, if they’re opposed to the American Jobs Act and have it scored, have it assessed by the same independent economists that assessed our jobs plan,” Obama told reporters at the White House. “These independent economists say we can grow the economy as much as 2 percent and as many as 1.9 million workers would be back on the job.”

“I think it would be interesting to have them do the same assessment--same people,” said Obama. “Some of these folks, by the way, traditionally have worked for Republicans, not just Democrats. Have those economist evaluate what, over the next two years, the Republican jobs plan would do.” Obama did not name the economists to whom he was referring, but Mark Zandi, the chief economist for Moody’s Analytics, stated in an analysis of Obama's proposal that: “The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.”

The White House has repeatedly stated that the plan would cost taxpayers $447 billion. That amount divided by 1.9 million jobs equals approximately $235,263 per job. The latest estimate from the Bureau of Economic Analysis--a division of the U.S. Commerce Department--is that based on economic data through the second quarter of this year, the GDP for 2011 will be $15.012 trillion. At $447 billion, President Obama's American Jobs Act would cost 2.97 percent of that $15.012 trillion GDP. GDP Chart from BEA.xls

http://www.cnsnews.com/news/article...n-grow-gdp-much-2-wh-estimates-it-will-cost-3

 

[editec]

No they haven't. Over the decades factory output has soared and so has employment. The trend is over time Americans work smarter with fewer grease monkeys and more engineer/programmers.

The number of engineers and programmers required is far less than the number of grease monkeys that used to be. Manufacturing employment has NOT soared. It has sharply declined (as a percentage of the total work force), even as factory output has indeed increased.

Here: Midwest Economy: Is U.S. Manufacturing Disappearing?

Manufacturing employment as a share of total employment in the United States has been declining over the past 60 years. In 1950, nearly 31% of nonfarm workers were employed in manufacturing. Since then, the share has been dropping three or four percentage points per decade, falling to 28.4% in 1960, 25.1% in 1970, 20.7% in 1980, 16.2% in 1990, 13.1% in 2000, and 9.1% in 2009. Even with this downward trend in manufacturing’s share of jobs, employment in manufacturing has on average been fairly stable over the past 60 years, averaging a decline of –0.1% per year. In contrast, the growth of nonfarm employment averaged 1.9% per year, and this led to the reduction in manufacturing’s share of jobs.

By 2006, the U.S. economy employed about as many workers in manufacturing as in 1950, just over 14 million. And so, looking at manufacturing employment alone leads one to believe that the sector is in decline or at best stagnant.

However, a very different conclusion emerges if you focus on the amount of goods being produced by the manufacturing sector. While employment has changed very little over the past 60 years,[3] output in manufacturing has increased at an annual rate of 3.4%. Manufacturing output in 2007 (the recent peak in manufacturing output) was over 600% higher than in 1950.

So it's just as I said, factory output is higher than ever, and America is not, as myth would have it, a country that no longer makes things. We're just a country that makes things very efficiently, employing far fewer people per unit of output than we used to.

Outsourcing is only partially the cause. At least as much is due to improved equipment and methods -- automation, in other words. Jobs lost to outsourcing could conceivably be brought home, but that would be a temporary gain; cheap foreign labor is cheaper than the automation that would replace it, but expensive American labor is not.

We are never going to see most of those manufacturing jobs again. They've been replaced by service jobs, and so what we need to do if we want to see wages like in the past is to empower service workers, not mourn the loss of grease-monkey jobs.

But the real crunch will come as service jobs are automated, too, as is already happening. When agriculture, manufacturing, and services are all automated, we will have a permanent dearth of jobs, an ability to produce goods and offer services with only a bare skeleton crew of people.

It's an interesting political and economic question what will happen when jobs become permanently and irreversibly scarce.

Well done, Drag.

Yes, exporting jobs to the third world is only PART of the problem workers are facing, that is very true.

In the medium run automation and artifical intelligence IS replacing human labor is going to be the major socio-economic problem facing mankind.

While increased efficiencies can create greater wealth, we do not have economic systems and human resourse solutions suited to responding to those increasing efficiencies.

How does one share the wealth when so much wealth is createable without human labor?


This is THE PROBLEM that as yet, almost no POL is willing to acknowledge let along deal with honestly.
Typically they imagine that educating the workers solves this problem, but it really cannot on the grand scale of society.

Inevitably what most people can be educated to do can be and will be done better and cheaper by machines.

Inevitably, as increased efficiencies continue to be found, we create an intrenched percentage of our population who have no economically viable purpose.

Right now, I'd say about 10% of America is essantially worthless economically.

In thirty years? Expect half the population to be economically redundant.

And it won't JUST be stupid people with no skills losing their jobs, either. No by a long shot!

Half you kids in your 20s who are now studying for your careers will find yourselves made redundant as what YOU do is done by AI and robotics, or as the business models change by techology thus making administration far less onorous, too.


Many of those made redundant by tecnology will never find work that paid them as well as they were paid when they were working, either.

Its ALREADY happening only we are as yet, mostly ignoring this problem.

 

[expat_panama]

...exporting jobs to the third world is...

--so ridiculously impossible that believing it requires amazing determination.

To believe a job can be 'exported' means when someone in the US stops doing what they're doing it forces some third-worlder to do it, or that any overseas peon can prevent an American from working by merely punching a clock. This morning I washed my breakfast dishes in Panama so that means someone in Fort Worth won't be able to clean his kitchen today.

If stupidity were a commodity we're looking at a wholesale inventory.

 

[Dragon]

It wouldn't be a problem except that the government adopted a labor-unfriendly attitude at the same time, making it prohibitively difficult to unionize the service jobs

how so?

I believe it's mostly at the executive level rather than in legislation. Take a look at this chart:

File:Illegal Union Firing 1952 - 2007.svg - Wikipedia, the free encyclopedia

This chart tracks the percentage of union elections that featured one or more illegal firings (i.e., employers firing a worker for union activity, which is against the law). Notice that it closely tracks the changes in presidential administration:

4-5% under Eisenhower
8% under Kennedy, Johnson, Nixon, and Ford
14% under Carter
31% in Reagan's first term
25% in Reagan's second term

It's stayed mostly steady in the 25% range since then, except for a brief drop to 16% (which is still terrible) under Clinton.

The way I interpret this is that the government under the more conservative administrations (both D and R, although the Rs have been worse) from Carter on, has shifted its philosophy about enforcement of labor law. Illegal firings are up because penalties for illegal union suppression are now low enough that employers regard them as a cost of doing business, much cheaper than having their workers organize.

The result is clear as well:

Labor Market Reporter: US Trade Union Membership: 1900-2000

Over the same period that union-busting has been enabled by a more capital-friendly government, union membership as a percentage of private-sector workforce has dropped from its 39% high in 1958 (under Eisenhower who was particularly union-friendly -- again we can't simplistically paint this as a partisan issue; he was better than ANY Democrat has been since him on this issue), to 9% in 2000, and it's gotten worse since then.

Weak unions mean weak bargaining power on the part of workers. When unions are strong, this pushes up the pay of non-union workers as well, because employers without unions have to compete with union shops for employees. Something close to union scale has to be paid or the employer risks high turnover and increased incentive for his own workers to unionize.

The loss of manufacturing jobs was inevitable. It's a result of advancing technology for the most part. But that isn't what's caused the decline in real wages. The loss of union power has done that, and the culprit isn't destruction of existing unions in the manufacturing sector (which hasn't really happened), but an unfriendly government making it harder to form new unions in the service industries that have absorbed the people who in the past would have been factory workers.

 

[AquaAthena]

What do we make of this?

Reuters:

The Institute for Supply Management said on Monday its index of
national factory activity rose to 51.6 last month from 50.6 in August.
September marked the 26th straight month of expansion in a sector that
has shouldered the broader economic recovery.
Economists polled by Reuters had expected the index to edge down to
50.5. A reading above 50 indicates expansion manufacturing.
A measure of factory employment rose to 53.8 last month from 51.8 in
August, while production climbed to 51.2 from 48.6.
Part of the long term rise in factory activity is a result of a weaker
dollar, which makes American exports more attractive overseas. And
there is no guarantee that what the factories are making will not
simply end up as unsold inventory.
But for the moment, the industrial sector appears to be one of the
only bright spots in a gloomy economy.


I mean obviously, with so many jobs shipped overseas or replaced by robotics, we'll never have the same percentage as we did in the 70's but this caught me by surprise.

Among the industries that added jobs in September were construction, retail, temporary help services and health care. Manufacturing cut jobs for a second straight month.

Economy added 103,000 jobs in September - Yahoo! Finance

 

[Meister]

What do we make of this?

Reuters:

The Institute for Supply Management said on Monday its index of
national factory activity rose to 51.6 last month from 50.6 in August.
September marked the 26th straight month of expansion in a sector that
has shouldered the broader economic recovery.
Economists polled by Reuters had expected the index to edge down to
50.5. A reading above 50 indicates expansion manufacturing.
A measure of factory employment rose to 53.8 last month from 51.8 in
August, while production climbed to 51.2 from 48.6.
Part of the long term rise in factory activity is a result of a weaker
dollar, which makes American exports more attractive overseas. And
there is no guarantee that what the factories are making will not
simply end up as unsold inventory.
But for the moment, the industrial sector appears to be one of the
only bright spots in a gloomy economy.


I mean obviously, with so many jobs shipped overseas or replaced by robotics, we'll never have the same percentage as we did in the 70's but this caught me by surprise.

Among the industries that added jobs in September were construction, retail, temporary help services and health care. Manufacturing cut jobs for a second straight month.

Economy added 103,000 jobs in September - Yahoo! Finance

I think that having 50,000 striking Verizon workers back to work explains a lot of this.