Economists Offer More Pessimistic View on Manufacturing in Upcoming Report
During the 2000s, as U.S. manufacturing was transformed by devastating job losses, prominent economists and presidential advisers offered comforting words.
The shrinkage of the manufacturing workforce — it declined by a third over the decade — actually represented good news, they said. It meant that U.S. workers and factories had become more efficient and, as a result, manufacturing companies needed fewer people.
“What happened to manufacturing? In two words, higher productivity,” wrote Robert Reich, former labor secretary in the Clinton administration, wrote in 2009.
“The decline in U.S. manufacturing employment is explained by rapid growth in manufacturing productivity over the past 50 years,” said Glenn Hubbard, former chairman of the U.S. Council of Economic Advisers under President George W. Bush.
But a handful of economists have begun to challenge that explanation, chipping away at the long-offered assurances that the state of U.S. manufacturing is not as bad as the jobs numbers make it look.
Instead, they say, it’s significantly worse.
The job losses, in their view, were caused more by the declining competitiveness of U.S. manufacturers and a wave of imports than more efficient factories. The apparent productivity gains reflected in the official U.S. statistics have been miscalculated and misrepresented, they say, a view that has been at least partially validated by new research.
“I bought into this idea for a long time that it was superior labor productivity that caused most manufacturing job losses,” said Rob Atkinson, of Information Technology and Innovation Foundation, a nonpartisan think tank. “Then I began to dig into the numbers.”