Making goods is a key to recovery
Manufacturing matters. In an economy largely driven by consumer spending, there's still a vital role that manufacturing can play by producing goods - and providing well-paying jobs. There was a time when this country could produce its way out of an economic downturn, rather than spend its way toward a hoped-for recovery, since consumer spending now makes up about 70 percent or more of today's economic activity.
It's encouraging that President Barack Obama used a portion of his State of the Union speech to praise manufacturing and its skilled jobs. Here in Connecticut, Gov. Dannel P. Malloy has repeatedly touted the growth of precision manufacturing, saying it's the way of the future for the goods-producing sector of our economy. We can't make widgets as cheaply as others anymore, but we can still manufacture complex submarines, sophisticated helicopters and advanced aerospace components within our borders with a skilled work force.
Laura D'Andrea Tyson, a former chairwoman of President Clinton's Council of Economic Advisers and currently a professor at the Haas School of Business at the University of California, Berkeley, penned an excellent economics blog for the New York Times this past month, where she explained that she is one of a rare group of economists who still believe that, yes, "manufacturing matters for the health of the American economy."
During the past two years, she points out, the U.S. manufacturing sector has led our economic recovery, expanding by some 10 percent and creating more than 300,000 goods-producing jobs. She admits that the number is still modest compared to private-sector job gains during that same period of roughly 3.7 million. But manufacturing has reversed a troubling trend - evident here in Connecticut, as well as the rest of the United States - of declining employment and shuttered factories.
Writes Tyson, "Economists agree that the United States must rebalance growth away from consumption and imports financed by foreign borrowing toward exports." Manufacturing goods, according to this expert, account for nearly 90 percent of merchandise exports from our country, and exports in general support more than a quarter of manufacturing jobs in the United States. "The only way," says Tyson in the Times' Economix blog, "the United States can rebalance growth and make a significant dent in its trade deficit for the foreseeable future is by increasing exports of manufactured goods."
Tyson says U.S.-manufactured exports are becoming more competitive in part because of rising wages overseas, a decline in the value of the dollar, better supply-chain coordination and transportation costs, and strong productivity growth among U.S. manufacturers.
Today's manufacturing jobs, says the Berkeley professor, are high productivity, high value-added jobs with good pay and good benefits. Between 2005 and 2010, the average weekly manufacturing earnings were some 21 percent higher than average weekly private earnings. Tyson's figures also show that in 2009, the average manufacturing worker earned almost $75,000 annually in pay and benefits. The average for non-manufacturing workers was about $63,000.
So stronger growth in manufacturing would mean more middle-income job opportunities for those who work in the factories as well as those who work in businesses supporting those factories.
Here in Connecticut, manufacturing has suffered long-term declines in employment, and today it makes up roughly 10 percent of our overall work force. In southeastern Connecticut, the figure is slightly higher. There does seem to be an increasing awareness of the importance of manufacturing in Hartford, in both the Malloy administration as well as in the legislature. And that's a good sign.
Manufacturing in Connecticut these days is a far more complex industry, as companies increasingly rely on more automation. Today's factory worker needs to be versed in computer-aided manufacturing, from initial design through the manufacturing process. Some manufacturers lament that such workers are increasingly hard to find. But the jobs are there, and increasingly so is the training, including many manufacturing-related courses found in our technical schools as well as our community colleges.
Tyson isn't alone when she says that manufacturing still matters. Policy makers are getting it, politicians are clambering aboard, and economists are pointing to the vital role that goods-producing employment plays in a healthy economy. As Tyson writes in the blog, "A strong manufacturing sector supports the key building blocks of the nation's innovation ecosystem - its skilled scientific, engineering and technical work force, its research and development, its ability to identify technical challenges and provide creative solutions."
Anthony Cronin is The Day's business editor.
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