Beyond 500,000

What would a government policy look like that encouraged U.S. manufacturing? Then, what would a policy look like that encouraged manufacturing jobs? These are two different questions.

Manufacturing activity remains strong. Per the Federal Reserve, durable goods industrial production is at an all-time high. Per the Bureau of Labor Statistics, this activity is creating jobs—500,000 manufacturing jobs since 2010.

And yet, that jobs figure isn’t all that impressive. First, choosing 2010 as the reference stacks the deck. That was the lowest year for manufacturing employment of the last 70. Second, this rate of growth is tepid. If we continue at this rate, it will take until 2020 to regain the manufacturing employment we had merely in 2008.

To be sure, one of the constraints impeding manufacturing job growth is the struggle to fill skilled positions in key areas—CNC machining, for example. However, across manufacturing in general, the larger issue is that manufacturers now have enough ways to reduce or replace labor that manufacturing activity no longer directly and certainly produces manufacturing jobs.

Elected officials seem not to recognize this yet. In his most recent State of the Union address, for example, the President lauded the opening of the National Additive Manufacturing Innovation Institute in Ohio. As well he should: Many would argue that helping manufacturers explore technology is a valuable role for government. Yet the President went on to say that institutes such as this one would serve as seeds for “global centers of high-tech jobs.”

That is an interesting claim. It is particularly so in regard to additive manufacturing. By merging what would have required separate components or even separate companies into a single build cycle, additive manufacturing promises to reduce the role of labor. While it will lead to additive-manufacturing-focused jobs, its long-term effect on manufacturing employment might be negative.

But again, that’s manufacturing jobs. The effect on employment overall is a different matter, and this is the important point. Because manufacturing is wealth creation and because that wealth will seek a purpose, the advance of U.S. manufacturing will create opportunities—including some new jobs in manufacturing, plus many new jobs in unrelated fields.

I think the elected officials want something more concrete than this. They want factories, perhaps. Support for manufacturing, in the popular view, ought to blossom into the sort of crowded factories that once were synonymous with manufacturing. While we still do have factories today, rarely are they as teeming with employees as they once were. Today, the link between manufacturing and manufacturing jobs is no longer rigid, because too much manufacturing value-creation now comes from small groups overseeing remarkably productive machines.

And that’s great. The jobs attached to these machines are much less likely to be sent to other places in search of lower cost. For this reason, we ought to help elected officials look past the factory fallacy to see the rich, society-wide value of supporting manufacturing today. If our choice is between a “manufacturing jobs” policy and a “manufacturing” policy, then I’ll take manufacturing.