Dealing with the Disintegration of Manufacturing in the US

Driving through the city of Gardner MA, old, decrepit furniture store signs and weak-looking brick buildings line many of the streets. Some have been rehabbed; others are still home to small furniture companies. The city, which once held 20 bustling chair factories at the turn of the 20th century, does not, anymore, resemble “the furniture capital of New England.”

In the 19th century and through much of the 20th century, the corporate factory was commonplace. These workspaces offered a significant number of jobs for citizens. Through the factory’s ability to generate jobs, products and wealth, cities with these factories prospered. In the past decade, we have seen a rapid decrease in the number of American factories. Though we were once characterized as an industrialized country, deindustrialized is now a more fitting title.

Many US companies have ceased production in the US or shipped their production overseas, taking advantage of the inexpensive wages and cheap production costs offered by other nations. From businessweek.com, 28% of GDP came from manufacturing in 1950, while only 12% of GDP was attributed to manufacturing in 2012. With real GDP increasing from the 50s, the decrease in wealth generated by manufacturing was therefore compensated for by other industries. However, the unemployment rate in 1950 was 5.3%, versus the 6.7% rate today. Thus, deindustrialization has been accompanied by economic growth, but also a higher rate of unemployment.

So, is the average American worker better off now compared to the 1950s? In ousting the factories and moving production offshore, people are forced to find non-manufacturing jobs. The typical factory worker during the 20th century engaged in menial, monotonous tasks for the entirety of their workday. Do we really wish for this type of work to be the headline job for the average American worker?

Along with growing our economy each year, we should also be increasing the well-being and job quality of the average worker. Though many support a rebirth of manufacturing, steering away from the unskilled factory work will have greater benefits for our nation and its people. Jobs in non-manufacturing sectors would likely increase critical skills such as education and entrepreneurship.

There are reports that closed factories in the US are seeing a surge in reopening. From CNN money, an Intel plant in Colorado Springs that shut down in 2007 now houses a plastics manufacturer, an administrative office for Everest University, and a small business development center. Similarly, an old Ford factory in Ohio is now used by a paper manufacturing company, an aluminum scrap processor, a manufacturer of mobile communications systems, and the University of Cincinnati-Clermont’s nursing program. Though these factories may not represent the typical businesses and services that move into reopening factories, one would hope there is an emerging trend of education and high tech services taking over factories. With the daunting task of lowering the unemployment rate, jobs and services like these must replace the type of factory jobs that characterized the 20th century. Creating valuable jobs is a difficult, painful and visibly slow process. But the return on quality of life and eventual economic progress is worth the wait.

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3 thoughts on “Dealing with the Disintegration of Manufacturing in the US

  1. letitgoeverythingisawesome

    I like the local angle with the story about Gardner.

    When you say “the unemployment rate in 1950 was 5.3%, versus the 7.6% rate today,” do you think that is a fair comparison? Maybe we were at full employment in 1950 while we are still taking to shake off our nasty recession today.

    Reply
    1. lydiadeneen Post author

      Yes, I thought about this after posting. With the unemployment rate at around 4-5% before the recession, the unemployment now versus the 1950s is comparable. However, this does not change the fact that the we are faced with a high unemployment rate today. I find it critical that we do not create mind-numbing work/manufacturing-type work like we had in the 1950s to replace the lost jobs. I realize it is somewhat of an idealistic want when trying to create 1000s of jobs, but I think we can make some advance on the type of jobs we are creating.

      Reply
      1. nygore16

        I also grew up in a former manufacturing town, so your post struck a particular chord with me. Moving into an era of the fully globalized economy, it seems to me that the U.S. is fated to lose out to developing countries when it comes to mass industry; I agree with you on this point, and I feel many others would as well. However, where things become much more interesting to me is how the United States could embrace a future role as mainly a service-based economy. I love your anecdotes about the converted factories being used as buildings for education and high tech companies. I think that’s a great use for some of the unused capital left over from factory closings. However, as economists we commonly discuss how displaced workers have to learn job skills and adjust in order to stay viable workers. I think a pressing issue is how unemployed factory-type workers can learn how to be productive service-based workers. Sure, we say they need to educate themselves, but how can they pay for such education if they’re unemployed with no money? As conservative as I am when it comes to the government’s proper role in the economy, maybe a way to help transition the U.S. economy is to provide re-education stipends as part of unemployment insurance paid to those displaced workers from dying sectors of the economy.

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