The loss of manufacturing jobs in the U.S. was a hot button issue in the 2016 Presidential race. This concern is not new. For several decades now, Americans have felt a measure of insecurity when it comes to the availability of quality factory jobs.
During the campaign, President-elect Donald Trump argued that manufacturing jobs have left the US as a result of bad trade deals. While that view resonated with both Republican and Democratic voters, research suggests that this belief could be based on a faulty premise.
Trump’s website contends that America has lost nearly one-third of its manufacturing jobs since NAFTA. It goes on to maintain that our country has also lost 50,000 factories since China joined the World Trade Organization. These assertions are backed up by research from 2007 by the Economic Policy Institute. According to the president-elect, the United States’ trade policies, growing trade deficits with Mexico and Canada, and subsidies with China are at the root of America’s so-called deindustrialization and the apparent disappearing middle class.
It is true that the United States lost approximately 5.6 million manufacturing jobs between the years 2000 and 2010. What is less clear is the real cause (or causes) for the loss.
A new study from Ball State University brings a causal theory that points away from international trade and towards another culprit – automation. According to the study, 85% of these jobs losses are actually attributable to technological change rather than international trade.
The study from the Ball State think tank found that while there has been a marked decline in manufacturing jobs, there has been an equally significant growth in industrial output in this country. Simply put, we are now producing more with fewer people. How does this paradox make sense? One word – robots.
Automation in manufacturing is not new, but its breadth is continually expanding. New technologies in the industry have rendered many low-skilled jobs obsolete, and this trend is only expected to continue with the rise of robotics and 3D printing. The numbers tell the story best: it costs a company around $25 an hour for a human welder to do a job, while the equivalent operating cost per hour for a robotic replacement is around $8 per hour. Of course, there are maintenance costs associated with automation, but amortized over the long haul, companies still come out ahead of where they would be with human workers.
The process of automation is not the entire answer to the critical question of why manufacturing jobs in America are disappearing, but it does appear to be part of the puzzle. Looking again at international trade regulations, Ball State found that 13% of the overall job losses in manufacturing had resulted from trade. Another study from MIT reinforces this point, estimating that rising Chinese imports from 1999 to 2011 cost up to 2.4 million American jobs.
So, it appears that the question of dwindling manufacturing jobs in our country is a result of multiple factors. The transition to a “digital” economy seems inevitable with the continuing progress of technology. But addressing international trade, as Donald Trump promises to do, may help ameliorate the problem, too.