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Every discussion of America's long-term economic prospects contains some version of "we don't make things anymore", "all of the manufacturing jobs are moving to China", and related memes.

Let's set the record straight on where the US stands in terms of manufacturing, what jobs moving offshore really means, and what we - both as a nation, and as the political left - should be doing about it.

First, we really do make stuff. A lot of stuff.  Its 11% of our GDP. The contributions include jobs with livable middle class pay levels, and a whopping 70% of private sector R&D.

Put another way, China accounts for 15% of global output in manufacturing.  The US: 21%. We're still number one. With the right policies, there's no reason we can't stay that way. In an election focused on jobs and job creation, its disappointing that growing the manufacturing sector isn't discussed, and even seen as largely impossible.

Well, its not.

Since 2005, skilled manufacturing jobs have grown 38%.    Job postings for skilled factory workers were 208,887 in August of this year

That's available jobs in one month. Pay for these starts around $45K-$50K, and there's often overtime, so if you want to put in the hours you can hit $80K. Average pay in 2010 $77,186. That's the kind of opportunity to live in the middle class that every American with a high school diploma should have, and 50% higher than our national median wage.

That job postings have grown much faster than the industries behind them says we're not training enough skilled workers. Its no wonder trade schools are booming, but we should be finding ways to make that more accessible and affordable. Start with:

- the vocational equivalent of Pell grants, and other financial aid for trade school enrollment (but this time tie it to outcomes, by for example making it conditional upon completion of the courses)

- highly subsidized or free daycare for people enrolled full time in trade schools; where possible extend the subsidies to things like public transit, internet access, and other tools that we routinely supply to college students, but not to trade school students

- tax incentives for trade schools with the highest placement rates for graduates in their field of study.  

In other words, reward the worker's initiative and the school's success.

Let's remember the size of the problem/opportunity: 12 million Americans work in factories.  Add in the supply chain, logistics, and other indirect manufacturing jobs, and you're up to 17 million jobs, or almost one in six private sector jobs. Manufacturing isn't dying in the US, its just being squeezed by the fact that we're a high cost location.

That gives you two choices. The conservative answer is to lower costs, essentially to become China: lower wages, fewer regulations, more H1B visas to push down the cost of even the most skilled workers, preserve the status quo hypocrisy on immigration to provide a huge pool of cheap unskilled labor.

That, and some blather about how we're all going to be entrepeneurs and start businesses (by borrowing the money from our parents, of course). Nothing about really preparing people to be high value workers, which is what many of those entrepeneurs can't find enough of.

The liberal answer so far has been in the right direction but timid: trying (and failing) to decouple employment from health insurance. Very weak attempts at addressing underwater mortgages, which create a huge barrier to labor market flexibility (can't take a job out of the area if you can't get out of that underwater home).

Instead of crying every time we see a story of a company's manufacturing being moved offshore, let's have an adult conversation about what government can and should do. Instead of manipulative stories about how Bain responded to an inexorable global trend and mommy got laid off and now her snowflake can't have dance lessons let's look at how we prepare workers to move up the value chain.

The right wants to claim the left is turning us in to Europe? Here's the tough love: the 1950s aren't coming back to a calendar near you. Its the 21st century. You can tilt the playing field towards business and the powerful few, and become China, or you can promote skilled industrial workers in your economy and become Germany.

Put that way, the Europe option doesn't sound all that bad.

That mean promoting education in math, the sciences, engineering. It also means the left needs to take opportunities for a teaching moment to explain the basics of macro-economics.

Prime example: Providing loan guarantees to late stage start-ups in critical industries - Solyndra is actually part of a program that is a success and exactly what we should be doing. Democrats should be ridiculing House Republicans who use Solyndra to try to kill green energy loan programs.  That's a teaching moment gone to waste.

Not everyone is a computer programmer, or has a college degree, or wants to work in an office. Bemoaning the move of a local factory to the other side of the Pacific won't put anyone back to work. Telling unemployed blue collar workers that the answer is tax breaks and deregulation is a cruel joke.

We need to offer a plan that gives hope and delivers change to manufacturing workers. Grow our industrial sector to match Germany's, which is about 25% of their GDP (double our proportion). They did it while preserving strong unions, good wages, and excellent pension and health benefits. It can be done. It has been done, elsewhere.

Let's do it here.

Originally posted to Things That Fell From My Brain on Sat Oct 13, 2012 at 09:23 PM PDT.

Also republished by In Support of Labor and Unions and Community Spotlight.


Make growth in manufacuring a top national priority?

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