Getting The Facts Wrong About US Manufacturing

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It really is quite amazing how many factual errors it’s possible to get into just the one analysis of what ails America’s manufacturing economy. Take this from the Washington Monthly for example:

Wage stagnation has impacted American workers more dramatically than those in most other wealthy countries. Since 2000, the United States has lost roughly five million manufacturing jobs, largely due to trade. Because of manufacturing’s high wages, job losses in manufacturing will contribute to wage stagnation absent increases in service sector pay that have not come to pass. Labor’s share of U.S. income has declined dramatically over the past quarter-century, following decades of stability.

Well, no, not really.

US manufacturing output is up substantially since 2000. Therefore it cannot be true that manufacturing job losses are due to trade stealing all the manufacturing. Here’s manufacturing output:

Peak levels of manufacturing output – credit FRED, public domain

And here’s manufacturing employment:

US manufacturing employment, down quite a lot – credit FRED public domain

It’s really pretty obvious that the decline in manufacturing employment is not because America is making less, isn’t it? Therefore it can’t be the nefarious foreigners stealing all the jobs by making stuff, can it?

So, it’s not trade which has taken the jobs.

Manufacturing’s high wages? Well, no. Average hourly wage in manufacturing is $26.60, average hourly wage in services is $26.10. Anyone who thinks we’re going to explain any of the ills the economy is prone to by 50 cents an hour on wages is deluded.

The labour share of income?

Labor share of US income credit FRED public domain

Can’t say that I see the decades of stability, nor a recent dramatic decline. In fact, we seem to have a rise in it as we recover from the recession. Some bumbling around the 60 to 65% level over the decades, yes, but then….

So, this is the starting point that our lad uses for his analysis of what ails the US economy and thus what we should do about it. Given the actual knowledge of the present state and recent history on display we’re not likely to get far, are we?

And yes so it comes to pass. We’re given something close to the real figures – glossed but roughly there – for who has benefited from globalisation, those global poor out there. We’re then told that the expansion of ISDS protections for corporations has made them happier to invest in flyblown hell holes. This is bad because corporations then exploit the locals – exactly that exploitation which has led to the rise in incomes.

The answer to this is global union negotiations. The piece written by a US union rep.

Sigh.

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