I wish someone could explain to me what it is that makes a manufacturer better than any other business. President Obama and the Democrats lament the decline of manufacturing in the U.S. as if it is indicative of some great malaise; the result of a horrific political campaign of malfeasance and an obvious manifestation of our self-imposed decline.
Let me pose to you this thought: manufacturing jobs are not and have never been that great. In fact, this nostalgia for the age of great manufacturers is a nostalgia for something that never really existed at all. No, what Obama and the Democrats crave is an economy that is unionized and can be more efficiently organized. Large-scale manufacturers fit that profile – many semi-skilled workers toiling away in repetitive jobs with little in the way of advancement opportunity. Wishing for an economy dominated by companies in this economic sector is like wishing for a return to feudalism, except that feudalism at least actually dominated western economies only a few centuries ago. The age of great union manufacturing jobs never really existed at all.
Yes, there was an age of great economic development, which we often refer to as the “industrial age.” However, no economist would say that the manufacturing jobs that existed at that time were anything but brutal and low-paying. The union movement did indeed helped alleviate that brutality, but labor laws, workplace health and safety laws, and competition for workers each had a far more enduring effect.
As pay and working conditions improved, the incentive to collectivize declined. In the meantime, technology and managerial science allowed for leaps in industrial productivity, reliability, and innovation, lessening the American industrial economy’s reliance on unskilled labor. A rise in the value of labor was the result, especially among those who garnered skills in technology and management.
Those industries that were difficult to convert to a highly-automated, high-productivity, technology-heavy environment -- especially those that still required an abundance of low or semi-skilled workers performing repetitive tasks -- began to migrate to places with an overabundance of labor. Some of this movement took place as an emigration to lower cost “right to work” states (a movement that continues to this day) and some jobs moved overseas to developing nations.
America has many advantages as an industrial base. Though it might not seem so at times, America is politically stable. America is still a free marketplace with investors willing to take risks. Raw materials are widely available here. The nation has good, reliable infrastructure. It has a sound legal system protective of property rights. It has an abundance of motivated and skilled workers, as well as highly-trained managers and support professionals. But its greatest advantage is the American market itself. It is nearly insatiable.
America, however, is not a perfect place to do business. America is litigious. Its government bureaucracy can be mind-numbingly dense, costly, and demanding. Taxes are high here. And labor is expensive. Any decision to relocate industrial operations requires a business to weigh the net advantage of operating in the United States against locating its operations in another country. Technology, infrastructure improvements, and the semi-skilled labor pools in many developing nations make them attractive to U.S. concerns, especially if the products built there are destined for markets outside the U.S.
No doubt, industrial America is game. No country has a workforce willing to work harder or longer than Americans. However, if labor is a major component of a product’s cost, American labor -- with all the associated costs (payroll taxes, unemployment taxes, workers' compensation premiums, health care mandates, and other labor-related regulatory burdens) -- can be very expensive. That's difficult to overcome and a disincentive to invest here. Add to this the burdens associated with organized labor and the disadvantage becomes chronic.
So the next time you hear Obama and the Democrats wail about the loss of manufacturing jobs in the U.S., remember, those jobs were, at best, mediocre. We all have grandparents, aunts and uncles who worked in America’s factories. Few would recommend it. Rather, these relatives were always the first to tell us to do our homework, get good grades in school, and get that college degree so that we could avoid the modest-paying, mobility-sapping, tedious, thankless manufacturing jobs.
This Democratic manufacturing mantra is nostalgia for a myth -- and a wish for a nation of union members toiling away at repetitive tasks and donating to Democrat tickets. Work is work – service, manufacturing, government, or retail. The value of a job has nothing to do with the economic sector in which it is classified and everything to do with the skills brought to bear to create, innovate, and improve.
It’s time we called this Obama obsession with manufacturing jobs what it is: just plain silly. Want to keep manufacturing (or, for that matter, any) jobs in the U.S.? Lower taxes, eliminate regulatory burdens, inhibit litigation, and reduce the labor and benefits burden faced by employers. The way to retain U.S. jobs is to make the U.S. more cost competitive. Yes, it's that simple.