Robert Reich: Manufacturing Illusions

Although there has been some improvement in the U.S. manufacturing sector lately Reich points out that for the most part workers are not sharing in those gains.

Republican presidential candidates have been pushing their recipes for advancing U.S. manufacturing. Obama too pushes a manufacturing agenda.

Obama has moved to remove tax incentives for companies to move overseas and create incentives to keep jobs in the U.S. Obama said:"Our goal,, is to create opportunities for hard-working Americans to start making stuff again".

U.S. consumers pent-up demand for goods has created a mini boom in manufacturing. Since January 2010, 404,000 manufacturing jobs have been added. Even with this addition there are 5.5 million less factory jobs now than in July of 2000 and a whopping 12 million less than in 1990. Even if production creeps up there are fewer and fewer factory jobs.

The new assembly line has robots where before there were well paid workers. Jobs for Americans who lack college degrees are less and less available and when they are they are usually non-union and poorly paid.

Even the strongest unions are negotiating contracts for new workers at about half of what workers received just a decade ago. The UAW has agreed to starting pay of 14 dollars per hour for new hires.

The Employee Free Choice Act would make it easier for workers to organize. Obama supported it in his first election campaign but did not move to make it law. This time he has not even promised to promote the bill if elected. Of course the unions have nowhere to go but Obama.

Obama has not spoken out vigorously against the anti-union and right to work campaigns in Wisconsin and Indiana. Corporations are doing well in manufacturing and services. Third quarter profits were 2 trillion a full 19 per cent higher than five years ago in the pre-recession peaks.

Wages however are declining in inflation adjusted terms. Wages as a share of income are at the smallest share since records have been kept in 1949, just 44 cents on every dollar of income.

As Reich sees it the problem in the U.S. is not just the recovery of manufacturing but the declining power of workers to share in economic growth. For capital this is not a problem but an ideal situation in which capital receives a larger slice of the economic pie. For more see this article.