Did You Hear the News? U.S. Manufacturing is Fine, Really

I was surprised to read in the Wall Street Journal that American manufacturing is just fine. In “The Truth About U.S. Manufacturing” (Feb 25, 2011) Mark J. Perry, professor of economics at the University of Michigan and visiting scholar at the American Enterprise Institute, says “endless laments in the news that ‘nothing is made in America anymore’ and that our jobs have vanished to China, Mexico and South Korea” aren’t true. I wonder: Is he right?  

Must admit, Professor Perry’s credentials intimidate the heck out of me. I’m the girl who struggled in math; who still finds graphs and charts perplexing; who defers to experts in the field of economics. I bow to them. I revere their expertise. I am not worthy.

And this, of course, is all my husband’s fault. Not the part about “I am not worthy,” but about deferring to experts in various fields. As I’ve mentioned in earlier posts, Don / Richie C is a physician. He has a scientific mind. He reads The New England Journal of Medicine and the Annals of Internal Medicine. Our kids call him Dr. House. But actually he’s way smarter than that crazy, Vicodin-addicted Dr. House character. Sometimes he’ll watch House and yell at the screen. “What? She doesn’t have (fill in the blank). Look at that x-ray. Did they test for (fill in the blank)? Oh, this is hilarious.” If we would’ve known each other in high school, I would’ve had him do all my geometry and biology homework. Except that he wouldn’t have done it for me because, like Happy Days Richie Cunningham, he is so darn ethical.

Anyway, Don / Richie C has this annoying habit of placing a high value on true science (with control groups) as opposed to phony science. For years I said to him, “Jenny McCarthy says vaccines cause autism.” He’d sigh and say, “There’s no science in that statement.” And then, lo and behold–after thousands of parents listened to Jenny and didn’t vaccinate their babies–the scientific truth finally debunked the McCarthy myth. True science trumps emotional diatribes. But it’s not as much fun.

My Dad operated by the same guiding principles. An engineer before he became a Hollywood cinematographer, he used to throw around phrases like “it just doesn’t add up.” Certain things in life were ruled by numbers. Period. If you fudged them or ignored them, you ended up with an unstable aircraft or bridges that fell down. That’s why Dad wrote “Import Backlash” in the 1970s in the first place: To say Look at these increasingly high unemployment figures, people. Look at the way businesses are beginning to manufacture offshore. The balance of exports to imports doesn’t look good. The numbers don’t add up. Rots o’ ruck if this continues.

So when Perry wags his professor-of-economics finger at those of us who worry about the death of American manufacturing, I’m compelled to sit up and pay attention. “[The] empirical evidence tells a different story,” he writes, “of a thriving and growing U.S. manufacturing sector, and a country that remains by far the world’s largest manufacturer.” We’re fine, really, he seems to say. Everyone just take a deep breath and calm down.

Prof. Perry admits his theory is a tough sell, especially in his hometown of Flint, Mich., “where auto-plant closings have meant lost jobs.” But, he insists, despite “difficult transitions,” the good news outweighs the bad. The bad news: “the U.S. has lost more than seven million manufacturing jobs since the late 1970s.” The good news: “Excluding recession-related decreases in 2001 and 2008-09, America’s manufacturing output has continued to expand.” Ok, so we’re talking increased output vs. more jobs.

In 2009, according to “International data compiled by the United Nations on global output,” writes Perry, “manufacturing output was $2.155 trillion (including mining and utilities). That’s 45% higher than China’s, the country we’re supposedly losing ground to…truth is that America still makes a lot of stuff…we’re merely able to do it with a fraction of the workers needed in the past.” Increased capital improvements, Perry explains, have led to increased manufacturing output. “The average American worker today is responsible for more than $180,000 of annual output, triple the $60,000 in 1972.” Tough to argue with those numbers.

But Professor Perry’s rosy picture ignores our enormous, incomprehensible deficit. It ignores our half-trillion dollar trade imbalance. It says our current level of unemployment, which some would argue is actually closer to 12% (or higher) than the 9.8% currently being reported, is temporary. We haven’t yet “transitioned to this new economy,” says Perry. This transition will occur when “displaced workers learn new skill sets, and a new generation of workers finds its skills are put to more productive use.” Perry touts a highly educated America where “yesterday’s farmhands and plants workers become today’s computer engineers, medical doctors and financial managers.” Hmm. Really?   

Let’s think about this: In 2005, the U.S. Bureau of Labor reported 22% of Americans had a college degree. Some would say, “That’s great. Almost a quarter of the population.” But what about the other 78%? People with nothing more than a high school diploma, or less? Where are their jobs? What’s the real cost to our country in jobless benefits and welfare? In 2010, 50 million Americans reportedly received Medicaid benefits, a federal-state program principally aimed at the poor. Where do these Americans fit into the “new economy”? They don’t. They fit into the old economy that’s been offshored to China and elsewhere.

And I have to ask Mr. Perry: If American manufacturing is so robust, how come I can’t find a single microwave oven that’s made in the USA? How come my computer and cell phone are made in China? How come I can’t go into a Target and find a single item of clothing, not a pair of shoes or a blouse or a pair of pants, that’s been made here? Is it because American workers don’t have the “skill sets” to produce those products? Or is it because those jobs–however unsophisticated and low paying–have flown the coop?

I think my Dad, the numbers guy, would say while Perry’s argument is persuasive, it “doesn’t add up.” After all, what good is “increased output” if a huge percentage of the population is jobless and hasn’t got the money to buy what you’re producing? I want to believe Professor Perry. He’s the expert, not I. Am I just another Jenny McCarthy, caught up in emotion, ticked-off because I can’t find a USA-made microwave? I wonder.

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8 Responses to Did You Hear the News? U.S. Manufacturing is Fine, Really

  1. Loyal Opposition says:

    Tina, let me give you a slightly contrarian view from the employer’s side of the issue. I work for a social service agency. Part of my job is to verify income sources and amounts for our participants. My clients are all low income. You would think that poor people would be very happy to get a good job and make every effort to keep that job. You would be wrong.

    For a large percentage of my clients, a job is something to be endured for just as long as it takes to qualify for unemployment benefits. I often see people who have a steady history of work with one large, stable company after another (Target, WalMart, FedEx, UPS) only to make sure that the moment they have put in enough time for unemployment to be available, it all goes south. Among the documents that come across my desk are copies of unemployment denial letters….usually for gross insubordination (cursing out a supervisor) or absenteeism (just not showing up, without calling or giving a valid reason). Many of these denials are overturned on appeal, and this is the preferred lifestyle for a good portion of the most “needy”.

    The generous welfare and unemployment network, combined with an intractable entitlement mentality, makes the U.S. workforce at the factory floor level very unattractive to an employer who has a tight margin and needs to be conscious of the costs that “workers” such as these entail. This is not even counting the routine “discrimination” law suits that employers must defend or settle when they dismiss a non-performing employee who is of a categorized minority group. Employers pay for unemployment, which now, if you include both the automatic and available extensions, is a full TWO YEARS. You are quite correct to point out the abuses of employees by employers in manufacturing. However, it is not as heart-tugging to highlight the widespread abuse of employers by the employees. Companies don’t outsource on a whim, they have been pummeled for decades by very knowledgable work-shy individuals.

    • Raquel says:

      Seriously? I know quite a few low income families and not a one view their jobs as “something to be endured”. Where do you live? Just wondering what area “your large percentage of clients” live because I know a few people who are looking for second jobs.

    • Tim says:

      Loyal Opposition: No matter how many times you hear that you are wrong in your statements, don’t let it get you. Just b/c there are hard working low income families does not mean there are NON-hardworking low income families. I grew up in the neighborhoods that lined the “projects” of my town. We had no money, and my mother worked night hours to be with us during the day. While she coud just as easily done what “most” of the mothers did in the projects and not work and live in cheap housing, she could not bring herself to be a leach. We watched mothers and kids who had “less” than us ride their bikes, use their air conditioners, drive their cars, etc. all the while never working. I hate to hear low income families are all hard workers. If that were so, you would probably be out of a job!

  2. Mark Furman says:

    Tina:

    I think a reason you are unable to find those US-made products is a direct result from exorbitant national debts, which lead to diminishing marginal returns. Outsourcing work overseas is a way for businesses to temporarily prevent price of goods from increases to real market prices brought on by inflationary pressures; and it is an approach for businesses that are seeking to maintain and or increase profit margins. Also, LO is right, employing efficient workers plays a key role in the company’s success of producing affordable goods and services.

    Not until recently, I, too, have invented and developed an innovative product that is entirely manufactured in the USA. I call the invention, Swinga Baby; my first son inspired it. Feel free to visit us at my website and blog to hear my story – and I look forward to hear from you.

  3. Andre Damrill says:

    I do not buy the “Lazy Americans” comments either. Prove it. I do not find any “Lazy Americans” only Americans scratching their heads asking where have all the jobs gone? Where are the products made in America, what happened to the companies that America was their home, their birthplace?

    I was glad to find this site. I have been thought of myself as a one woman crusader in my quest for American Made Products. I am so happy to find another that is wondering where all the American Made Products have gone?

    I recently went to my local Farm and Feed Store “Atwood’s” I was going to buy a pair of boots that I thought would be as American Made, as Apple Pie. I found the boots in my size but as I tired them on, I noticed they where made in China! What! I thought, no way! I began picking up boots and looking at the boxes and what did I find to my amazement. All were made in China, cowboy boots, work boots, rain boots, even dairy boots.

    I wandered around the local Atwood’s store with tears stinging my eyes, nothing I could find was made in the “Land of the Free”, “Home of the Brave” I left the store without my purchase, I left purchasing nothing.

    I have long blamed Walmart for causing the loss of many American Jobs. With their growth and the sale of cheap products, now I have discovered that not only is it Walmart but many retailers in this country that are to blame. These stores want our business and our dollars but at what cost to this country?

    I remember as a child growing up hearing of rumors that China would one day wage war on America, HA! they didn’t have to, they have defeated us from within!

  4. Dear Tina, Hi my name is Lydia j., and congratulations on what you are doing especially with your Dad in mind. I am writing to find out who make baseball caps in America if i can. Do you know anyone, please, need help. Can we talk, please call me at 215-245-5864,thanks. And God Bless You.

  5. Lydia M. says:

    Thank you for this website. I agree wholeheartedly with your Dad’s view that out-sourcing= lost jobs = sick economy.
    One sad part of out-sourcing is how it encourages more. Say manufacturer A and B make the same product. If A out-sources and can thus charge a lower price, B is forced to cut workers and benefits or else out-source too, or suffer losses to the point they may go bankrupt.
    The only solution to this downward spiral is for people to be educated. More Americans need to understand that saving a few cents or dollars to buy a product made in China vs. American-made is costing all of us much, much more. High unemployment, higher taxes as less employed are paying in, greater numbers of poor needing services, as well as a gloomy future for our children are the result of us buying those cheaper goods.
    I’ve become a big label reader. It is dismaying to find Chinese made food items at the supermarket. Now I check those labels, too. (Frozen veggies from China, half a world away, all items our farmers grow, seem the ultimate in craziness!) I buy from local artisans for gifts, which is luckily very easy to do at a local craft consignment store, rather than my old habit of ordering imported goods from catalogs. We’re shopping for badly needed kitchen appliances and have managed to find a few quality ones made here, thank goodness. Anything we buy is influenced by where it is made now, just as much as the quality of the item.
    When following the trail of imports, it seems the big corporations are at the heart of it. The only way to get through to their solely profit-driven mentalities is with our purchasing choices.

  6. JeffM says:

    Tina-

    I read the same WSJ article and would agree with your dearly departed father “it doesn’t add up”. You notice it said we’re the largest manufacturer INCLUDING MINING AND UTILITIES. I’d like to see what our manufacturing output is when you remove mining and utilities numbers. After all, the US burns a lot of electricity lighting up retail stores that exist on every street corner. Let’s also see the mfg. output after you remove military and space hardware. Have you purchased a battle tank or satellite lately? You’ll also notice that Mr. Perry doesn’t say what we make. When it comes to consumer goods, it’s pathetic. While China make all the computers, plasma TVs and cell phones we use, America makes cardboard boxes and shampoo.