“They’re closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they ain’t coming back
To your hometown” (Bruce Springsteen, My Hometown)
Now I don’t want to get on the “Hate The Donald Train”, but what kind of drugs is he smoking when he talks about bringing back the manufacturing jobs.
The truth of the matter is that the USA has never manufactured more products, the problem is that this has not resulted in the sort of concentrated job creation that drove the industrial mid-west in much of the 20th century particularly post WWII.
There are two components to this problem. The first is that many large manufacturing firms left the north “Rust Belt” have closed and or relocated to other Sunbelt locations with cheaper labor and much lower organized labor rates, and rite to work states. This has resulted in structural unemployment in the former Rust Belt States of the North and Great Lakes Regions.
Second, the fact is that so much of industrial productivity is now highly automated allowing these manufactured goods to be to be produced by a tiny fraction of the labor that used to be required.
The simple fact is that as in the Springsteen song above, these jobs are not coming back, they have been gone for a very long time from the area that they left. The new and modern plants with higher outputs per unit of labor will not be relocating back to the Hometown. Placing all the tariffs in the world on goods entering the USA is not going to solve this problem and put these displaced people back to work, they do not proses the skills or knowledge to work in these newer highly automated industries. The manufacturing that does return will be of smaller and less economic scale causing higher prices to all consumers and while it will add a Made in the USA option to the marketplace, it will likely be priced uncompetitively, unless there are corresponding tariffs on the imported equivalent, thereby making everybody worse off.
And the international firms that have built the new facilities are not going to relocate this capital investment, they may add capacity, but they are not going to re-activate some derelict facility in Central Ohio.
I have read countless stories of companies operating in these states that still have a hard time to find good employees because their prospective hires can’t pass a drug screen test, and the work is skilled and requires a high degree of mental sharpness. (National Geographic, Feb 2017). Yet the downtrodden economic conditions of many of these areas have led to wide spread substance abuse as people try to self-medicate their way out of despair and poverty.
Both The Canadian Department of Labor and the US Department of Commerce have gone on record recently stating that they anticipate a major restructuring of the workforce in the next decade with upwards of 40% of the jobs in our current economy at risk of becoming automated out of existence in this time frame. Yes it is true, that there are many jobs that will emerge from this transformation and we may not even now what many of these jobs will be today, but it is a sure bet that many of the new jobs will replace jobs that were low skill and had low educational requirements, and in many cases also moderate skilled jobs. If you were earing a middle class income but have not completed high school, what chance do you have for these new emerging jobs that will most likely require some level of advanced education? And I won’t even get into the additional problem if you loose your blue collar job, are over 50 and may or may not have completed high school. Ok, I will, You are economically FUBAR’d.
This theory is confirmed in a recent interview with Mark Cuban, who even feels that we are entering the realm of machine developed software that is superior to human developed code, so even those good jobs are not safe, though there may be a short period where coding is the new blue collar work.
How do we solve the Structural Employment Problem?
And what about structural unemployment, when the jobs are not located where the people/skills are? Many that have been left behind in the rust belt are attached to the only property that they can afford, and with the local economy, they can’t leave it behind to relocate for work, there simply is no bid on their real estate. And no bid on their skills, they have been out of work for too long and the skills that they possess are obsolete. They also may be older workers, and I think we need to have a strategy on hiring older workers, that are probably more expensive, but we need a viable way to combat age discrimination.
In theory, technology could and should play a role in making this viable. If skills can be introduced to the population in the former industrial heartland, and people there are willing to work in non-manufacturing jobs, then technology may allow for the place of the people to be irrelevant. I believe that this needs to be the focus of employment strategy. But at the end of the day, not everyone is going to want to code, and some simply will not be able to code, we are not all wired the same, nor endowed with the same intellectual abilities. What do we do with these people, too young to retire, and perceived to be too old to code?