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: Binyamin Appelbaum
Via: The New York Times

Personal income for residents of Arizona, Florida and Nevada grew much faster than the national average during the housing boom. Since the peak of the boom in 2006, however, incomes in those states are lagging behind the national average.

The pattern continued in 2011, according to the latest data on personal incomes released last week by the Commerce Department. It forms part of the growing body of evidence, which I described in an article on Tuesday, that the recession may mark an enduring shift in the geography of American growth. Regions where borrowed money fueled booms are now struggling under the weight of those debts.

The map below compares the growth of per capita incomes by state over two consecutive five-year periods, from 2001-6 and from 2006-11.

Source: Commerce Department

In the seven states shown in pink – Arizona, California, Florida, Idaho, Nevada, Utah and Wyoming – income growth outpaced the national average during the housing boom, but has lagged behind the average since the crash.

They join the states marked in red, where personal income growth has lagged behind the national average throughout the last decade.

The states marked in light blue, by contrast, outpaced the national average over the last five years after lagging during the earlier period. They join the dark blue states, which have maintained above-average income growth.

By: Becca Aaronson
Via: The Texas Tribune

In late 2009, when Texas was at its lowest employment total during the the recession, the state had lost more than 400,000 jobs. But since then, Texas has regained nearly 500,000 jobs and began 2012 with the highest employment total in its history.

There are 10.7 million people who currently work in Texas, but nearly 1 million more are still unemployed. Although the unemployment rate has dropped, at 7.3 percent, there’s still room to improve.

The interactive below explores how the Texas economy has changed over the last four years. Use the graph to see how each major industry has fared. You can also compare how industries have changed by using the “command” key on a Mac or the “control” key on a PC to select more than one industry.

Below the graph is a map showing the January 2012 unemployment rate in Texas’ largest metropolitan areas. If you click on a region, details about that region’s economy will pop up in the table below. [click image to view the original interactive version at The Texas Tribune]

Source: Texas Workforce Commission, Texas Labor Market Review Feb. 2012

via The Washington Post

A sliver of China’s foreign investments, totaling more than $68 billion in 2010, came to the United States, a trend the Obama administration hopes to change. Read related article.

Source: China Commerce Ministry. The Washington Post. Published on February 10, 2012, 8:28 p.m.

By: Richard Florida
Via: The Atlantic Cities

The venture capital industry bounced back considerably in 2011, according a report released last week by PricewaterhouseCoopers and the National Venture Capital Association. Investments totaled $28.4 billion, an increase of 22 percent over 2010 and a whopping 44 percent from 2009. They are almost back to their 2007 pre-crisis high of $30.8 billion.

The map above, by the Martin Prosperity Institute’s Zara Matheson, shows the regional breakdown. (The PWC MoneyTree data is only available for this set of regions). Silicon Valley remains the leading center for venture capital investment with $11.6 billion, 40 percent of the total. New England (mainly the greater Boston area) was second with $3.2 billion in capital, 11 percent of the total. Greater New York was not far behind, with $2.7 billion or almost 10 percent. It also bested New England in the third quarter of 2011.


The graph above tracks venture capital investments since 1995 for the five biggest regional centers for investment. While much has been made recently of New York’s rise in venture capital and high-technology, the graph shows a pretty stable baseline over the past decade with a modest uptick over the past couple of years. If anything, Silicon Valley’s overall lead, and the gap between it and New York, New England and other leading regions, appears to be increasing.

Venture capital investment can and does flow widely across regions and is attracted to areas with the best deals and strongest ecosystems for innovation and entrepreneurship. It is largely a myth that a lack of venture capital funds in certain places holds back innovation there. Generally speaking, efforts to publicly provide or subsidize venture capital in and to certain locations have been fraught with difficulty.

via Morning Edition, NPR

As the Mayor’s Conference takes place in Washington D.C., city governments are dealing with severe problems at home — from high unemployment to funding cuts. Steve Inskeep talks to Mick Cornett, the Mayor of Oklahoma City, about how his city has managed to avoid some of these problems.