WATCH: What's the right question to ask about a manufacturing revival?
This weekend, following a report by ABC News’ David Muir on the state of American manufacturing, George Stephanopoulos brought out the experts to pour water on the suggestion that the sector is rebounding. In the segment, Steven Rattner, President Obama’s former auto adviser, notes that manufacturing employment is nowhere near what it was.
We lost 6 million manufacturing jobs from 2000 to 2009. Since 2009, when the recession ended, we have gained back fewer than 600,000. We have actually gained manufacturing jobs back at a slower rate than we have gained other jobs back in the economy.
Yes, yes. That’s definitely a good point he makes. We make it an awful lot. But his next point, that manufacturing just doesn’t pay what it once did, is eminently debatable. And then Rattner’s argument – one that he has made before, that manufacturing won’t save the economy, just kinda trails off.
He's happy with it …
… but he’s answering the wrong question. As economist Jared Bernstein pointed out back in January, the question isn’t whether manufacturing alone can save us all, but “what distortionary factors are holding the sector back from achieving its potential?”
Here’s what we know about manufacturing:
- It encourages innovation, which encourages economic activity, which in turn encourages more jobs.
- It can still offer broad employment.
- And it still pays well – definitely more than the fast-food and retail jobs that are in great supply these days, as analyst Zachary Karabell concedes in the above clip.
And here’s what we could do to encourage more of it:
- We could address currency manipulation, which other countries use to keep their manufacturing sectors healthy and ours weak.
- We could spend on manufacturing, in the form of massive (and necessary) infrastructure improvements.
- And we could encourage it in the tax code, because manufacturing encourages innovation, can offer broad employment, and still pays well.
Critics of a manufacturing rebirth like pointing out that the “rebirth” hasn’t been much. No argument there. But their suggestions for economic improvement grow thin from there.
Well, we’ve got one: grow manufacturing activity and manufacturing employment, for all of the reasons above.
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