Wednesday, April 25, 2018 by David Williams
Will the high rate of manufacturing jobs ever return to the U.S. or other first-world countries? According to new research, as hopeful as this is, it’s highly unlikely. And it’s not just because of the impending robot takeover that’s poised to rid Americans of jobs wholesale. Indeed, the research suggests that it’s down to a number of different factors, mainly money.
To be more specific, the notion that robotics and automation are going to be the main reasons why manufacturing jobs won’t be available for Americans for a very long time is a bit misleading. While true – and those will have an effect – the things that caused manufacturing jobs to disappear from the U.S. in the first place are the ones that will still have a bigger impact moving forward.
According to Aashish Mehta, an associate professor in the department of global studies at the University of California, Santa Barbara (UCSB), President Trump’s wish to bring back manufacturing jobs to the U.S. is noble, but simply impossible to accomplish. “Not going to happen,” he said in a statement. “The world has changed.”
In Mehta’s view, a worldwide thirst for manufacturing along with the productivity- and wage-increasing jobs that come along with it are the main reasons why it will never come back to the U.S. at this point. In his words, this makes it increasingly hard for wealthy countries to compete in the global market, all while making it possible for poorer countries to get rich through industrialization. (Related: BREAKING: US manufacturing index collapses to lowest point in nearly 2 years as global stocks plummet.)
Mehta was one of the researchers who worked on a new study titled, “Manufacturing matters…but it’s the jobs that count,” which was recently published in the Cambridge Journal of Economics. In it, the authors managed to compile an unprecedented dataset from 63 countries with shares of manufacturing jobs from 1970 to 2010. This is said to have represented 82 percent of the total world population in 2010.
Based on the paper, it became abundantly clear that every time manufacturing moves away from one country and into another, the share of manufacturing jobs in the new location peaks at a noticeably lower rate than the previous one. That is, more people are required to take over one person’s job whenever manufacturing shifts from country to country, and they rely on machinery to compensate further, at that. So it doesn’t ever go up to the same level that it was before the shift.
“While the original OECD countries peaked with over 30 percent of their jobs in factories, today’s industrializers seem to be peaking at around 12 to 14 percent,” Mehta explained, referring to the drastic reduction in the employment percentage after manufacturing went from developed countries to poorer ones. “We also showed that the per-capita income level at which this decline sets in has fallen over time. These findings suggested to us that the path to riches through industrialization had narrowed considerably.”
This is highly important to note, because there is a widespread assumption that somehow, if manufacturing were simply brought back to U.S. soil, all of its previous benefits would magically reappear and thereby strengthen the economy. But based on this new research, it’s clear that this assumption is wrong. The research also suggests that jobs aren’t actually “lost” when manufacturing transitions to poorer countries.
“The cheap way to put it is, a robot didn’t take your job, and a Chinese worker didn’t take your job,” clarified Mehta. “Two Chinese workers got your job. And the robot helped your coworker increase their productivity, allowing them to keep theirs.”
Mehta presents this argument a bit clearer thusly: If you took half of all manufacturing jobs in Europe, bringing it down from 30 percent to just 15 percent, those jobs would then go to places like China or India. “The fraction of Chinese or Indian workers working in factories would go up very little, because there are so many of them,” he said. “But globally, no factory jobs would be lost.”
Knowing that can help put things into perspective, and make it clear that there are other ways to face the problem of job losses in the manufacturing industry. It might be useful to look into those instead of persisting on avenues that might end up leading nowhere.
Read more about economic issues at RealInvestigations.news.