Are Manufacturing Jobs a Mirage?

Dean Baker looks into things and finds little more than sand.

Manufacturing jobs are a big deal in US politics. US politicians talk about manufacturing jobs all the time.

Dean Baker commented on Trump’s silly propaganda about manufacturing jobs:

We know that Donald Trump has no interest in reality, but just in case anyone might be tempted to take his boasts about bringing back manufacturing jobs seriously, it is worth a quick visit to the actual numbers. In 2016 Trump focused his campaign on a series of Midwestern swing states that had been hard hit by the loss of manufacturing jobs due to trade. He insisted that he would bring back these jobs as a result of his great skills as a deal maker. He would negotiate new trade deals so that we would get back the jobs we had lost.…

The basic story is that Trump may have rebuilt our manufacturing base and brought back the jobs lost to trade in his head, but he did not do it in the real world.

But in a piece on China, Baker made this comment about manufacturing jobs:

Finally, the labor market would be better off if China did not subsidize its exports with an under-valued currency and other mechanisms, but this matters much less today than it did two decades ago. Most of the good-paying jobs in manufacturing have been lost and there is little reason to believe they will come back in the absence of major structural changes, most importantly, higher unionization rates.

The U.S.-China confrontation is a game for the elites. The rest of us would be best served by sitting this one out.

To what extent are manufacturing jobs no longer desirable? To what extent is something right at the center of US politics now a fantastical mirage?

I asked Baker about this.

Didn’t you used to talk about how getting the dollar down could bring home good jobs?

I changed my mind about whether it mattered much. Unionization rates in manufacturing have tumbled over the last decades. The wage premium has largely disappeared. This means there is no special reason to want manufacturing jobs.

When exactly did you change your mind? 

I looked at the data. In the last decade we added more than 1 million manufacturing jobs, but the number of union members in manufacturing fell. The average hourly wage in manufacturing is now below the overall average. When we get back jobs in manufacturing, they are not good-paying jobs, so there is no reason to want them compared to any other job.

If not manufacturing jobs (which you said have almost no wage premium today), what do you see the middle class doing for a living in 10 years? 20 years? 

We can make any job a middle-class job with the right economic structures. If the minimum wage had kept pace with productivity growth since 1968, it would be $24 an hour today. Reduce the importance of patent/copyright monopolies, fix the corporate-governance structure, downsize the bloated financial sector, and allow our doctors and other highly-paid professionals to enjoy international competition, and we can do it.

Why should anybody care about the trade deficit if manufacturing jobs aren't even that valuable? 

The trade deficit matters because it is a drain on demand. It can be offset by running larger budget deficits, but since there are likely political limits to budget deficits, we need to limit the size of the trade deficit to maintain high rates of employment.

Is the wage premium (which now barely exists) the only thing that made manufacturing jobs particularly attractive?

They were unionized at a higher rate, which goes hand-in-hand with the wage premium. There is still a modest difference between the rate of unionization in manufacturing and the private sector as a whole, but it has gotten very small.