By: Eduardo Porter
Via: The New York Times

To hear Mike Bink, one might believe American manufacturing is about to recapture its lost glory.

Master Lock, which has made locks in Milwaukee since 1921, has brought 100 jobs back from China over the last year and a half. And Mr. Bink, who has worked at the plant for 33 years and heads the United Auto Workers local, is sure more will follow. “They are making a lot of capital investment; buying a lot of new equipment,” he said. “That will create more jobs.”

Master Lock’s story dovetails nicely with the budding upturn in manufacturing employment, which has rekindled hope across a Rust Belt pummeled by 30 years of job loss. Nationwide, factories have added 400,000 jobs in the last two years, the first sustained bout of growth since the 1990s, replacing about a fifth of the positions lost during the recession. Other companies, from Otis to General Electric, are bringing home jobs once thought lost for good.

Mr. Bink’s enthusiasm has echoed from the factory floor all the way to Washington. During his State of the Union Message, President Obama wove Master Lock’s tale of repatriated jobs into a narrative of recovery that could serve him well in November. “We have a huge opportunity, at this moment, to bring manufacturing back,” the president said. “But we have to seize it.”

Things have not looked this promising for manufacturing jobs in a long while. Rising costs in China — where the government is letting the currency gain against the dollar and wages are rising at a double-digit pace — are making it more attractive for American companies to produce at home. Expensive oil adds to the cost by pushing up the price of freight.

To do so, his administration has proposed a piñata of tax breaks and incentives intended to transform the incipient movement into a new golden age for factory jobs.

Yet a revolution in manufacturing employment seems far-fetched. Most of the factory jobs lost over the last three decades in this country are gone for good. In truth, they are not even very good jobs.

As much as the administration needs a jobs strategy, one narrowly focused on manufacturing is unlikely to deliver.

Much of the anxiety about factory jobs is based on the misconception that job losses have been due to a sclerotic manufacturing sector, unable to compete against cheap imports. Until the Great Recession clobbered the world economy, manufacturing production was actually holding its own. Real value added in manufacturing, the most precise measure of its contribution to the economy, has grown by more than two thirds since its heyday in 1979, when manufacturing employed almost 20 million Americans — eight million more than today.

American companies make a smaller share of the world’s stuff, of course. But what else could one expect? Thirty years ago China made very little of anything. Today its factory output is almost 20 percent of world production and about 15 percent of manufacturing value added.

What’s surprising is how little the United States lost in that time. American manufacturers contribute more than a fifth to global value added.

Manufacturers are shedding jobs around the industrial world. Germany lost more than a fifth of its factory jobs from 1991 to 2007, according to the United Nations Industrial Development Organization, about the same share as the United States. Japan — the manufacturing behemoth of the 1980s — lost a third.

This was partly because of China’s arrival on the world scene after it joined the World Trade Organization in 2001. Since then, China has gained nearly 40 million factory jobs. But something else happened too: companies across the developed world invested in labor-saving technology.

Consider Master Lock. Its Milwaukee plant is operating at capacity for the first time in 15 years, before it started sending work overseas. It is producing much more stuff than it did back then. But it is doing so with 412 workers — about 750 fewer than it had 15 years ago.

“They used to throw bodies at something to get the job done,” said Ron McInroy, the U.A.W.’s head for the region encompassing Milwaukee. “Now they look at the best utilization of manpower and the best utilization of machines.”

So it is across the economy. In his forthcoming book, “The New Geography of Jobs,” the University of California, Berkeley, economist Enrico Moretti points out that the average American factory worker makes $180,000 worth of goods a year, more than three times what he produced in 1978, in today’s dollars.

It may not matter to factory workers who lost their jobs. Whether forced out because an employer moved production to China or because a fancy new machine makes it easier to compete against a rival in China, the job is gone.

Still, the distinction is important. Without an understanding of the forces at work, policy makers’ attempts to bolster manufacturing could backfire.

One thing is clear. Most of the jobs lost to China and other poor countries cannot “come back.” They don’t pay anywhere near enough. And they don’t exist here anymore anyway.

The factory jobs we really want will be fewer and will require more education. But they will pay more.

Remember agriculture? In the 1960s, plant scientists at the University of California, Davis, developed an oblong tomato that ripened uniformly, and its engineers developed a machine to harvest it with one pass through the fields. By the 1970s the number of workers hired for the tomato harvest in California had fallen by 90 percent.

In the book “Promise Unfulfilled,” Philip Martin, an economist at the university, says that in 1979 the worker advocacy group California Rural Legal Assistance sued the university for using public money on research that helped agribusiness at the expense of farm workers. And in 1980, Jimmy Carter’s agriculture secretary, Bob Bergland, declared that the government wouldn’t finance any more projects aimed at replacing “an adequate and willing work force with machines.”

It’s hard to say that workers won this battle, however. After Mr. Bergland pulled the plug, research on agricultural mechanization came to a near-halt. Yet farm work today remains probably the worst paid, most grueling job in the United States.

A tricky thing to understand is that most jobs in the United States are created in areas of the economy not exposed to global competition. They are nannies and doctors, lawyers and roofers. In a recent study, the Nobel laureate Mike Spence and Sandile Hlatshwayo of New York University found that the part of the economy that does not have foreign competitors added 27.3 million jobs from 1990 to 2008. The sector that competes in global markets added virtually none.

This doesn’t mean the administration should ignore manufacturing. We need world-class, innovative industries that compete in global markets. They won’t add a ton of jobs precisely because they must stay lean to compete. But they will pay for those jobs.

The 33,000 Apple workers in Cupertino, Calif., sustain 171,000 additional jobs in the metropolitan area, Mr. Moretti estimates.

This pattern suggests, however, that a jobs strategy should take care not to blunt the edge of our most competitive firms. If outsourcing sharpens their edge on world markets, punishing then for doing so could destroy American jobs.

More important, perhaps, manufacturing is not the nation’s only cutting-edge industry. Many of the most innovative firms are not manufacturers but service companies. Apple is very competitive. But so are the companies that design applications running on its iPhones and iPads. Hollywood studios and marketing companies are big exporters. These firms need highly trained workers and pay high wages.

Mr. Moretti says each job in an “innovation” industry, broadly understood, creates five other local jobs, about three times the number for an average job in manufacturing. Two of them are highly paid professional positions and three are low-paid jobs as waiters or clerks.

Innovation — not manufacturing —has always propelled this country’s progress. A strategy to reward manufacturers who increase their payroll in the United States may not be as effective as one to support the firms whose creations — whether physical stuff or immaterial services — can conquer world markets and pay for the jobs of the rest of us.

By: Jack Mollen
Via: HBR Blog Network

It is time for immigration reform that will keep more top technical talent in the United States. Today, American colleges and universities are educating foreign nationals who come here to earn advanced degrees in science, technology, engineering and mathematics (STEM fields). We educate them, and then U.S. immigration regulations force them to leave our country to return home, where they contribute to economic growth and the success of our competitors overseas. That has to change.

When allowed to remain in the U.S., foreign nationals with STEM degrees earned at American schools have gone on to become some of our most distinguished engineers and researchers. They add value to our economy and our companies. They generate new insights and contribute to innovations that change the way the industry addresses previously unsolved problems. Yet, U.S. employers face greater demand for STEM skills than the supply of STEM graduates. And the lack of immigration reform is constricting the pipeline of technical talent.

The 2009 study, Losing the World’s Best and Brightest (funded by the Kauffman Foundation, in collaboration with Harvard Law School, Duke University’s School of Engineering and U.C. School of Information and Harvard Law School), found that “foreign national students… are planning to leave the U.S. after graduation in numbers that appear to be higher than the historical norm as measured in STEM disciplines. A significant number of these students also say they intend to open businesses in the future.”

According to the study, foreign national students claim their reason for leaving the U.S. after graduation is because they “are very worried about obtaining the work visa required to pursue employment in the U.S. (a major concern for over 70% of respondents) and about the difficulties of obtaining permanent residency (a major concern for over 50% of respondents from China and Europe).” After coming to the U.S. to learn, they don’t want to have to wait a decade or longer just to receive Permanent Resident status and the security of knowing that they can continue to pursue their career in the U.S., employed by American firms, where they would contribute to U.S. economic growth.

In addition to the trouble of retaining STEM graduates in the U.S., EMC and other leading employers in the U.S. face enormous obstacles when we try to relocate top technical talent from abroad into the United States. For example, take the L-1B visa, which allows employers to bring tenured employees to the U.S. to perform work utilizing their specialized knowledge of proprietary products and processes of the sponsoring employer. This kind of employer-based nonimmigrant petitions were granted routinely in the past. They are now being audited or denied, even though the regulations governing submissions have not changed. According to the National Foundation for American Policy, denial rates for L-1B petitions filed with the United States Citizenship and Immigration Services rose from 7% in fiscal year 2007 to 27% in fiscal year 2011.

Immigration reform that brings more technical talent to the U.S. will make the American economy and U.S. companies more competitive on the global stage. More competitive U.S. employers, in turn, will be the ones that create more jobs for others to fill.

Here are three steps the U.S. should take without delay:

  •Offer expedited green card processing for foreign nationals who earn Masters degrees or higher
   in STEM fields from U.S.-based schools and who then accept positions with U.S.-based employers.

  •Provide an efficient avenue to bring in key foreign talent from overseas subsidiaries to increase U.S.
  economic competiveness [sic].

  •Create a Trusted Employer Program for U.S. employers that maintain top internal compliance
   departments to ensure all immigration regulations are followed.

It is time to build up the U.S. economy by retaining top talent in the U.S., regardless of where that talent was born.

By: Richard Florida
Via: The Atlantic Cities


Manufacturing is back, at least as a talking point.

President Barack Obama has been making an election-year case for a “built-to-last” economic strategy centered on American manufacturing. A recent Brookings Institution report argues that manufacturing is a powerful engine of exports, innovation, and high-wage jobs. In a feature story in the New York Times Magazine, Adam Davidson extols the resurgence of craft manufacturing in everything from high-tech precision parts for military helicopters and guided missiles to new herb mustards, all-natural beef jerky, and artisanal pickles. “Instead of rolling our eyes at self-conscious Brooklyn hipsters pickling everything in sight,” Davidson writes, “we might look to them as guides to the future of the American economy.”

Before we get too excited, I thought it might useful to put some actual numbers on the table. The chart below, by Michelle Hopgood of the Martin Prosperity Institute, outlines which manufacturing fields are most prevalent based on detailed data on production occupations from the Bureau of Labor Statistics. To save space, we have grouped some of these categories together and also shortened some of the occupational titles.


Manufacturing work is important. We should applaud the men and women who do it, and do our best to make it better, more engaging, and higher paying. The best manufacturing jobs today look more like knowledge jobs, involving high levels of analytical and social intelligence skill such as team building and developing others.

But manufacturing will not provide a viable economic future, at least not by itself.

For starters, pay for productions workers is below the national average. Their average pay is $33,700 per year, or $16.24 per hour. That compares to an average of $44,410 across all jobs, or $21.35 per hour.

Even more telling: some manufacturing industries pay much better than others. The 66,530 tool and die makers or the 36,200 aircraft assemblers have great jobs earning – $48,710 and $45,230, respectively. But the nearly 150,000 sewing machine operators average just $22,630 a year, or $10.88 per hour.

The number of manufacturing jobs is also falling quickly, despite the government’s best efforts. Roughly 8.2 million American workers are employed in production jobs. This does not count the 408,000 Americans who work in fishing, forestry, and farming occupations. Add them in and it brings the total to 8.6 million workers, roughly 6.5 percent of America’s total labor force of roughly 127 million. That’s down from roughly a third of the workforce in 1950. And it’s projected to decline further, to about 5 percent, by 2020.

The decline in production workers mirrors the decline of agriculture over the course of the 20th century. But it may be even swifter. A century ago, roughly 37 percent of Americans worked on farms. This declined to just slightly more than one in five workers by 1930 and 17 percent of the workforce by 1940, a period of crisis and economic resetting analogous to the current one. More than one in 10 Americans were still employed in agriculture in 1950. It was not until 1960 that the share of workers in agriculture hit 6 percent, a level similar to the share of production workers today. Since that time, the share of Americans employed in agriculture has fallen to a fraction of one percent.

Of course, the United States still produces a huge amount of food, but we do it far more efficiently and with far fewer people. Similarly, America still makes a lot of manufactured stuff, including a great deal of advanced and artisanal products, but we also do that more productively and with far fewer people. Trying to rebuild the U.S. economy around manufacturing today is the historical equivalent of trying to build the 20th century American economy around farms.

By: Richard Florida
Via: The Atlantic Cities


Green jobs are often said to be a key growth area of the future. But according to a new report from the U.S. Bureau of Labor Statistics, just 3.1 million people, 2.4 percent of all American workers, were employed in “green goods and services” jobs in 2010.

The report defines green jobs across five categories: production of energy from renewable sources; energy efficiency; pollution reduction and removal, greenhouse gas reduction, and recycling and reuse; natural resources conservation; and environmental compliance, education and training, and public awareness.

The majority of these green jobs (2.3 million) come from the private sector. The public sector employed about 860,000 people. The largest sector of employment was manufacturing, with more than 450,000 green jobs.

This squares with a July 2011 Brooking Institution study of clean economy jobs, which identified 2.7 million clean economy jobs across the United States. The report found that median wages for clean economy jobs are 13 percent higher than median U.S. wages, and that a disproportionate share of clean economy jobs are staffed by workers with relatively little formal education. This has created a sizable group of “moderately well-paying green collar occupations,” according to the report.

My colleague Zara Matheson at Martin Prosperity Institute used the BLS data to map the distribution of green jobs across the 50 states and the District of Columbia.


The first map, above, shows the number of green jobs by state. Leading the way were six states with more than 100,000 green jobs. California take the top spot with 338,400, followed by New York (248,500), Texas (229,700), Pennsylvania (182,200), Illinois (139,800), and Ohio (126,900). But, of course, those are also some of the largest states, so it makes sense that they have the most green jobs overall.


The second map (above) charts the share of total employment comprised by green jobs across the states. Now, Vermont is the leader – green jobs make up 4.4 percent of its total employment. Green jobs make up more than 3 percent of total employment in D.C. (3.9 percent), Idaho (3.7 percent), Maryland (3.6 percent), Alaska (3.6 percent), Montana (3.5 percent), Oregon (3.4 percent), Colorado (3.3 percent), Washington (3.3 percent), Pennsylvania (3.3 percent), New York (3.0 percent) and Wyoming (3.0 percent).


The third map charts the the number of green goods and services jobs per thousand workers. Now, all-urban Washington, D.C., leads with 44.6 green jobs per thousand workers, followed by Vermont (20.6), Alaska (16.1), Maryland (15.1), Montana (14.7), and Oregon (14.3).

With the help of my colleague Charlotta Mellander, I took a quick look at the factors that might be associated with green jobs across states, including income and education levels as well as other economic variables. (The analysis is based on green jobs per thousand workers). As usual, I point out that correlation points only to associations and does not imply causality.

Green jobs are more prevalent in higher income states. There is a moderate correlation between green jobs and state median income (.4).

Green jobs are more closely associated with education or human capital levels. We found a correlation of .65 between green jobs and the share of college grads in state.

Green jobs are also more likely in states with knowledge-based and creative economies. We found a substantial correlation between green jobs and the share of creative class workers (.8) and a significant negative correlation between green jobs and the share of workers in blue-collar jobs (.6). Green jobs are not associated with the share of high-tech jobs in a state.

This analysis is interesting. It suggests that, though the green job sector is likely to grow, it is unlikely to provide a steady supply of lower-skill jobs or substantially bolster the economies or job markets of more heavily industrialized states.

As chock-full of data as the BLS report is, it does not report on green jobs at the metro level. For that we must turn to a database of green jobs built by the Brookings Institution (in partnership with the Battelle Corporation). Jose Lobo and Deborah Strumsky, both MPI research affiliates, have been granted access to the full Brookings database, and in collaboration with MPI research director, Kevin Stolarick, are preparing a detailed study of the geography of the green economy. We’ll be bringing you its results here.

By: John M. Broder
Via: The New York Times

For the first time, the federal government on Thursday released an estimate of the number of so-called green jobs in the United States economy, saying that 3.1 million people are employed in the production of goods and services that benefit the environment.

The Bureau of Labor Statistics, a unit of the Labor Department, spent more than a year compiling its report, which found that green goods and services accounted for 2.4 percent of total United States employment in 2010. The study, based on a survey of employers and a relatively broad definition of the term ”green,” will provide a baseline against which future job growth or decline can be measured.

The definition and value of green jobs have been intensely debated for the last several years, as President Obama promised to create five million new environmentally friendly jobs. The administration has devoted tens of billions of dollars of federal stimulus money to projects intended to reduce energy use, clean up the environment and generate employment during the deep recession.

Republicans charge that the programs have largely been boondoggles, steering money to favored industries and companies while providing very few new jobs. They point to a number of companies, like the solar panel maker Solyndra, that defaulted on loans, laid off workers or otherwise failed to live up to their promises.

The bureau’s report will not resolve these conflicts, as it provides a snapshot of green employment for only one year, 2010, and its definition of green jobs – “jobs in businesses that produce goods and provide services that benefit the environment or conserve natural resources” – is broad enough to invite some controversy.

That includes the manufacture of energy-efficient appliances, batteries and wind turbines, workers at nuclear plants and hydroelectric dams, municipal bus drivers and trash collectors, and 65,050 workers in natural resources and mining, presumably those involved in cleaning up around oil rigs and coal mines.

The bulk of jobs – 2.3 million of the 3.1 million total – are in the private sector, with the greatest numbers in manufacturing, construction, transportation and waste services. The public sector had 860,000 green jobs in 2010, accounting for about 4 percent of public sector employment. Local government provided more than half of the public sector jobs, with the biggest sector being transportation and warehousing, including operators of mass transit systems.

The numbers track fairly closely a study released last summer by the nonpartisan Brookings Institution, which calculated that 2.7 million Americans are employed in what it called the clean economy. Brookings found that clean industries employed more workers than the fossil fuels or bioscience industries do, but fewer than exist in information technology.

Mark Muro, a principal author of the Brookings study, said Thursday that the Bureau of Labor Statistics report provided firm numbers to a sector of the economy that until now has been poorly defined.

“The B.L.S. data does not include a sense of growth in the sector, but it provides a useful snapshot and reaffirms that this is a modest-sized, heavily manufacturing-oriented set of activities that can be measured,” Mr. Muro said.

He said the numbers would probably provide ammunition for both sides in the green jobs debate as well as a useful reality check against expectations and promises that, in retrospect, now appear to have been exaggerated and unrealistic.

California had the highest number of green jobs, 338,400, representing 2.3 percent of the state’s total employment. New York was next with 248,500, or 3 percent of total employment.

Vermont had the highest percentage of environmentally friendly jobs, at 4.4 percent. The District of Columbia was second, at 3.9 percent.

via TMASC
Opportunity grows in the region

New TMASC report in development
On November 19, 2008, Bexar County Economic Development held its inaugural Texas-Mexico Automotive SuperCluster (TMASC) Conference in San Antonio, Texas. Bexar County created TMASC that year to leverage the changing geography of automotive assembly and automotive markets in North America. TMASC would capitalize on changes in the industrial landscape by building upon the region’s numerous global vehicle and heavy equipment manufacturers, hundreds of Tier 1 original equipment suppliers, and world-class innovative assets. This first look at the region was facilitated by an excellent benchmark study conducted by TIP Strategies, Inc.

Late last year we engaged TIP Strategies to take a look at the region again and create an updated report. The finalization of that report is currently underway. Meanwhile, here’s a snapshot of the TMASC region as we saw it three years ago.

TMASC, circa 2008
Heading into 2009, the TMASC region was home to the final assembly plants of nine global manufacturers. These plants employed more than 18,000 workers and were capable of producing almost 900,000 units per year. The region also had over 200 Tier 1 supplier plants, which employed over 133,000 workers.


TMASC, circa 2011
As of the end of last year, the TMASC Region was home to seven automotive assembly plants and parts plants, employing over 17,000 workers and capable of producing over 800,000 units. The region also contained six commercial and military vehicle manufacturing plants.

Over the last few years, TMASC’s scope has broadened to reflect the region’s additional heavy equipment and commercial vehicle manufacturing activity as well. Heavy equipment manufacturers in the region include Caterpillar, John Deere, and Manitou, which together have seven plants in the region. There are also two specialty vehicle manufacturers: Skyline, which manufactures recreational vehicles, and Frazerbilt, which manufactures emergency response vehicles.


Growth hasn’t come in the form of new plants only. In 2010, Toyota invested $100 million to add a Tacoma production line at its plant in San Antonio. Moreover, yesterday GM announced its continued expansion in the region with a new $200 million metal stamping facility at their plant in Arlington. The new operation will create 180 jobs and save GM an estimated $40 million each year is logistics costs.

Regional roll out coming later this quarter
Once the new TMASC report is finalized, we will be sharing it via the TMASC website, as well as through special presentations to selected TMASC partners throughout the region. We look forward to providing an updated vision of the region to our TMASC communities and stakeholders this quarter, and to exploring new collaborations like we did last week with the Capital Area Economic Development District committee of the Capital Area Council of Governments (CAPCOG). To schedule a presentation, please contact us. We are excited about the many opportunities 2012 will give us to increase advanced manufacturing assets and activities in the region.