The Tides of History

We spend the best part of our lives at work. Every morning we say goodbye to our loved ones and rush to our offices, cubicles, counters, factories, labs, or whatever place we call “work.” For most hours of the day, for most days of the year, and for most years of our lives, our best energies are dedicated to our jobs. Our jobs have become so important that in many cases they define how people perceive us and even how we perceive ourselves. They determine our standard of living and where we live. For some of us, our salary and work schedule determine what sort of family we have, how many children we can afford, and how much time we spend with them. In short, our private and collective well-being depends on what kinds of jobs are out there and what security they might offer. The news on this front has been bad for quite a while.

I am not talking just about the Great Recession of 2008 to 2010. Recessions and economic expansions have always affected the number and kind of jobs available, and the years since 2008 have been particularly tough in this regard. But recessions and expansions are short-run phenomena. Their ups and downs have always occurred and always will. They are just a small part of the picture. Far more important—and interesting—are the longer-term trends that ultimately determine our standard of living.

 Lately we have seen some signs that the long decline in manufacturing employment might be slowing down. Wages in China have been creeping up, a predictable effect of increased prosperity. China’s move to revalue its currency, the yuan, has further increased labor costs from the perspective of American companies. General Electric has reopened an appliances factory in Kentucky after years overseas. Carbonite has brought a call center back to Boston from India. After twelve years in Mexico, Otis Elevators is moving its production from Nogales back to South Carolina. There are even signs of “insourcing,” the opposite of outsourcing, in which foreign companies invest in production facilities in the United States. A Chinese company called Yuncheng has opened a factory in Spartanburg, South Carolina, finding it cheaper than Shanghai. All these signs have generated a growing perception among pundits and commentators that the U.S. manufacturing sector is about to turn a page and experience a renaissance. Yet while all of these examples make compelling media stories, they are not representative. They capture our attention precisely because they are exceptions that buck the trend.1

The perception of a forthcoming manufacturing comeback was further bolstered by unexpected gains in manufacturing employment in 2011, the first time in many years that production jobs grew in a significant way. But the reality is that the gains in 2011, while certainly welcome news, came after much worse than usual job losses during the recession years of 2008 and 2009. Looking forward, there is little to suggest that the long-run downward trajectory that we saw in Figure 1 is about to change in a permanent way.

 When confronted with painful job losses, many people insist that we can and should turn back the clock by protecting the manufacturing sector from all external and internal threats. Some believe that there is something special and uniquely American about producing physical “stuff” and that we should use the full power of the federal government to stop the bleeding of “good blue-collar jobs” from the United States. The more sophisticated version of this argument is articulated in countless op-ed pieces, New York Times articles, and a wave of new books that argue that proper legislative action can stop the decline of manufacturing. In this version, proposed policies are often labeled with appealing names like “National Strategy for Manufacturing,” but they invariably involve protectionist policies, subsidies, or both.

Essentially, the “manufacturing activists” propose fighting history. Their arguments—both the sophisticated version and its populist sibling—ignore the simple fact that the forces that have caused the decline of manufacturing are difficult to stop. Like King Canute, the English king who believed he could make the tides recede and then almost drowned, the activists cannot simply command the forces of history.

If the jobs are not in manufacturing, then where are they? Right now there are about 141 million workers in the United States. About 112 million work in the private sector, the rest in various forms of government jobs. We collectively put in 2,522,228,000,000 hours of work each year. If we do not make physical things anymore, what do we do all day? More important, what will we do tomorrow? What will propel us forward?