Manufacturing Matters: How Much?

July 1, 2002
U.S. labor productivity has risen astoundingly in recent years, and investments in high-tech are paying off.
Manufacturing Matters: How Much?

Many Americans are still believers in the Service Economy, and the employment numbers seem to give them a boost. Indeed, it was back in the late ’60s that the United States became the first modern economy to count more service jobs than manufacturing jobs. Those numbers today are around 51 million jobs in services and about 18 million in manufacturing of all non-farm employment. The manufacturing number hasn’t changed much in 30 years. The service sector has tripled. So that’s where the action is? Not at all.

First off, manufacturing jobs pay better. A lot better. The typical factory job in America pays around $42,000. Service jobs average $26,000, according to a new book on all of this titled Manufacturing Works, by Fred Zimmerman and Dave Beal from Dearborn Trade Publishing, Chicago. But more important is the structure of a modern economy like ours. After all, what do most service industries service if not the production sector?

The astounding fact that our $9.4 trillion economy today puts out all those goods and services with essentially the same number of manufacturing workers as we had 30 years ago is something to ponder. And, in terms of aggregates, manufacturing’s total dollar contribution to the enormous American economy grew by almost 50 percent in the 1990s. Our industrial output is something like 50 percent higher than Japan’s and equal to the combined manufacturing totals of Germany, the U.K. and France, according to the book. Not bad for a service economy.

Further, and as explanation, the authors point out that manufacturing productivity rose more than 31 percent in the 1992-99 period alone. Service sector productivity, incidentally, has actually declined in the past few years. Such statistics, the authors note, include huge variations from company to company and industry to industry.

More recent numbers suggest, even during this uncertain time, that industrial investment in modern, high-tech machinery and computers over the past decade is still paying off. Output per man-hour in manufacturing continues to increase even more significantly.

Simply put, the country remains a production powerhouse even though millions of its own citizens don’t seem to know it, and that is a very serious problem. For if Americans somehow come to believe that manufacturing is something for Asians, Europeans and others to do, while we just count up the television sets, cars and golf clubs they send us — then send them thank you notes and IOUs — eventually reality will arrive at our door. No country can stay wealthy for long without producing wealth. No country can have a standard of living that is high for long without advanced productive work done in state-of the-art factories.

“America should cast a skeptical eye on the argument that we have reached some sort of ‘post-industrial state,’ wherein manufacturing will give way to a higher order that calls for other nations to do the producing while the United States enjoys the fruits of that production,” Zimmerman and Beal write. Their point is that while we remain the leader in total manufacturing output and productivity growth, those leads are threatened by the ignorance of millions and the anti-manufacturing ideas of many others in various walks of life.

Rarely is industry portrayed in popular culture as anything but a nuisance; they’re polluters, they offer primitive working environments and boring and/or noisy places to work. The authors of Manufacturing Works have added a book to be used against such nonsense. It may not tell you anything you don’t already know in general terms, but give a copy to your local politicians, your congressman and your kids’ teachers. Encourage them all to read it. It’s just what they need to combat the mushy ideas about economics that seem to dominate our national discussions these days.

George Weimer, contributing editor, [email protected]

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