The Epic Mistake About Manufacturing that's Cost Americans Millions of Jobs

For decades the narrative being pushed was that manufacturing jobs in the United States were dropping due to increased reliance on automation to improve efficiency and that we were shifting to a more service based economy. This was supported with an additional narrative that we were not losing as many jobs to foreign markets were labor was cheaper. Turns out none of it is true.

While automation in the United States is leading to higher efficacy and that we are indeed shifting to more service-centric businesses we lost millions of manufacturing jobs to foreign countries, particularly China. Why the confusion? Bad data.

For years the analytics used to show American manufacturing performance was growing incorporated data from the computer industry, chiefly microprocessors, once that was backed out the decline was staggering and showed that job loss in manufacturing was the worst at anytime in our history. How could this sector have so much impact? Computational improvement.

How economists calculate manufacturing output

In order to understand how the manufacturing sector is doing, economists look at how much stuff factories are making, compared with previous years. The key measure of this output is “value added”: manufacturing sales, minus the cost of things like electricity and parts used in the manufacturing process. They look at this across a dozen or so manufacturing subsectors, such as paper, apparel, furniture, and chemicals.
But that figure alone isn’t enough. To make the output volume comparable from one year to the next, the statisticians aggregating the data adjust for price changes, as well as improvements in product quality. For example, let’s say statisticians want to figure out how much the sales of Intel processors grew in 2017 versus 2016.

The problem is, the processor released in 2017 is superior to that sold in 2016 in many tangible ways. But how do you account for the fact that a 2017 processor provides users with more value? In general, statisticians assume the difference in value between the two models is just the difference in their prices. If, say, the 2017 processor costs twice as much as the 2016 one does, then selling one 2017 processor counts as selling two of the 2016 versions in the statisticians’ books.

The adjustment makes it seem like the whole of American manufacturing is making many more goods than it actually is. In this hypothetical, the real output data might look like increased sales of processors. But it could also simply reflect the statisticians’ assumptions that people value their new processor more than they did earlier models, because the new version’s superior performance. Sou rce

The data, instead of being analyzed for what it was conveying, was used to push geo-political narratives and simultaneously opening the United States consumer market to foreign goods manufactured at ultra-low costs. The real surge in declines took place almost immediately after China was allowed to enter the World Trade Origination which would preclude it, or so they hoped, from reprisal for their known currency manipulation and protectionist policies.

At this point neither party has a solution to the obvious problem, protectionist tariffs are not a long term solution and turning a blind eye is even more useless. A concerted effort to re-grow United States manufacturing will need to be embraced by both sides and the unfair practices of certain trade partners needs to be addressed if there is any hope to restoring jobs that have now shifted to foreign markets.



Further reading:

The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade

The China Syndrome: Local Labor Market Effects of Import Competition in the United States

The Surprisingly Swift Decline of US Manufacturing Employment

A primer on how China’s currency works, for Donald Trump

Zombies once destroyed Japan’s economy—now they’re infecting China’s

Measuring Manufacturing: How the Computer and Semiconductor Industries Affect the Numbers and Perceptions

I always had a thought that Unions played a pivotal role in the in the downing of American manufacturing jobs.

originally posted by: MorpheusUSA

I always had a thought that Unions played a pivotal role in the in the downing of American manufacturing jobs.

The source material makes a very compelling case that the bulk of it is due to unfair business practices and protectionism by the Chinese.

a reply to: AugustusMasonicus

Well, lets hope this administration is doing something about it, I know that Trump has called them out multiple times.

a reply to: AugustusMasonicus

One could say that this "mistake" was a part of the NWO globalist strategy as to how to bring about their totalitarian vision of control... but that is none of my business!

a reply to: AugustusMasonicus

I was under the impression that we weren't supposed to say anything negative about China and it's 100 year plan to become the economic leader of the world and relegate the US to a minor status.


RUSSIARUSSIARUSSIA!

Some areas of manufacturing actually cannot fill their jobs because they are looking for young people to train and are offering good pay and benefits but the gotta get a degree crowd keeps steering kids away from the jobs.

Stupid thing is many of those "manufacturing" jobs are actually tech jobs with incredible job security, since the coding for those automated machines are so different from normal tech jobs the training is all done in house.

originally posted by: Arnie123
Well, lets hope this administration is doing something about it, I know that Trump has called them out multiple times.

At the moment there's not much occurring. The major issue is addressing Chinese practices.

originally posted by: elementalgrove
One could say that this "mistake" was a part of the NWO globalist strategy as to how to bring about their totalitarian vision of control... but that is none of my business!

It certainly appears political.

originally posted by: DBCowboy
I was under the impression that we weren't supposed to say anything negative about China and it's 100 year plan to become the economic leader of the world and relegate the US to a minor status.


RUSSIARUSSIARUSSIA!

They need to be addressed if we are to remain economically viable.

Isn't this obvious to everyone?

originally posted by: AugustusMasonicus

originally posted by: DBCowboy
I was under the impression that we weren't supposed to say anything negative about China and it's 100 year plan to become the economic leader of the world and relegate the US to a minor status.


RUSSIARUSSIARUSSIA!

They need to be addressed if we are to remain economically viable.

Hate being a Debbie-downer but this is a discussion we should have had 30 years ago.

It's like discussing smoke detectors while watching the house burn.

Took 3 months to permanently fill100 positions at a local company because nobody could do 40 hours and be there on time. Finally they got a good crew and are doing great.

People just don't want to work and this $50k a year jobs with bennies and only a diploma required

originally posted by: mikell
Took 3 months to permanently fill100 positions at a local company because nobody could do 40 hours and be there on time. Finally they got a good crew and are doing great.

People just don't want to work and this $50k a year jobs with bennies and only a diploma required

Can you point me in a direction to that job? I am serious.

originally posted by: Irishhaf
Some areas of manufacturing actually cannot fill their jobs because they are looking for young people to train and are offering good pay and benefits but the gotta get a degree crowd keeps steering kids away from the jobs.

Stupid thing is many of those "manufacturing" jobs are actually tech jobs with incredible job security, since the coding for those automated machines are so different from normal tech jobs the training is all done in house.

I would like more info about this, can you clarify a bit or give me more info to learn about this?

a reply to: MRinder

I know aircraft manufacturing has quite a few jobs go unfilled each year.

As for them being more of a tech position rather than a traditional manufacturing job, that's the information some of my instructors in school passed along.

Just got my BS in IT security, and it came up quite a bit that to get an IT job in manufacturing you pretty much have to be trained by the company since a lot of the information is proprietary.

No I do not have links to share at the moment, working on my resume for some jobs in the Train industry right now.

a reply to: Irishhaf

Thanks. I appreciate the info.

a reply to: mikell

Stuff like you describe don't happen in California. Here in California, it is very difficult to find a job. You really need to get a degree and even then, its not a guarantee. You have to know people to actually get into many of these jobs which are mostly corporate, IT, and Hollyweird related stuff.

a reply to: MRinder


Southwest Michigan. But it was last year

If you have skills the nuke plants pay twice that

originally posted by: elementalgrove
a reply to: AugustusMasonicus

One could say that this "mistake" was a part of the NWO globalist strategy as to how to bring about their totalitarian vision of control... but that is none of my business!

No mistake about it. Trade agreements were created to make nations interdependent, actually forcing trade and international currency exchange. The great mistake was in losing manufacturing critical to US infrastructure for such as spare parts for the military and to sustain the power grid, rail systems and agricultural machinery. The US would find itself screwed in any long term military engagement were China to cut off our supplies.

The WTO was central to the globalist plan which is why no amount of brutality was too excessive.


Love the soundtrack.