WSW: Trade, Automation And Manufacturing Jobs

Feb 12, 2018

American Axle and Manufacturing in Three Rivers - file photo
Credit WMUK

Upjohn Institute for Employment Research Economist Susan Houseman says the idea that trade is not responsible for a decline in manufacturing jobs has taken hold with economists and the media. But Houseman who is the institute’s Vice President and Director of Research says the data shows trade is at least one cause of fewer manufacturing jobs.

The Upjohn Institute recently released Houseman’s report called Understanding the Decline of U.S. Manufacturing Employment. She also presented her findings at the Economic Policy Institute in Washington D.C. January 12th. Houseman tells WMUK’s Gordon Evans that manufacturing jobs have always been lost during downturns in the economy. But she says the collapse in the 2000’s was historically unprecedented because many of the jobs lost did not come back. Houseman says that has left the U.S. with a weak manufacturing sector.

Some economists have emphasized automation as a cause of manufacturing’s decline over trade. Houseman says it is an important phenomenon, and she says automation has driven down employment in agriculture. But Houseman says in the early 2000’s the dollar appreciated making manufactured goods more expensive. Plus she says there were more low cost imports, and weak export growth. Houseman says that led to a large trade deficit.

Houseman says numbers for computers and semi-conductors skew the numbers on manufacturing. She says the industry packs a big punch relative to size in the market. Houseman says rapid improvement in computers has caused extraordinary rate, and drives up the numbers for productivity.

Only 9% of the workforce is considered to be working in manufacturing now. But Houseman says the industry has deep supply chains, and many people classified as employed in services rely on manufacturing Plus she says there are ripple effects for businesses near a plant that closes or reduces its workforce.

Asked if her report shows that lost manufacturing jobs can be brought back, Houseman says that can be difficult with plants established in other countries. But she says there is still a lot of manufacturing done in the United States, and jobs that can be saved. Houseman says many things impact manufacturing and employment. She says that includes taxes, the exchange rate and trade.