In another month of strong U.S. employment growth, one key sector shrank in November – again. For the seventh month out of the past 10, employment in manufacturing was down from the previous month. The Bureau of Labor Statistics reported that, adjusting for seasonal factors, there were about 4,000 fewer manufacturing jobs in November than in October – and 78,000 fewer than there were in January, when the sector hit its peak (at just over 12.3 million jobs) for the current expansion.
The declines this year can be attributed in part to potentially temporary factors such as a strong dollar (which makes U.S. manufactured goods more expensive abroad) and low oil and gas prices (which cuts demand for drilling equipment), so it’s possible that the losses of the past year will be retraced and a new business-cycle peak reached. But that peak will still be way below the all-time record of 19.6 million manufacturing jobs set in June 1979. And manufacturing’s share of total nonfarm payroll employment, which hit an all-time low of 8.4 percent in November, is likely to keep on declining.
This is what progress looks like. Get used to it. The economy is evolving, and manufacturing’s share of gross domestic product has actually stayed about the same. The U.S. still makes lots of stuff, but it takes far fewer people to do it thanks to automation, and what we really ought to be doing is upgrading pay and benefits for other jobs so more people can share in the American Dream once offered by employers such as U.S. Steel and General Motors.
My own take on manufacturing is that we should be doing more to encourage it in the U.S., but shouldn’t expect it to be a huge job creator. The better job prospects will still be in work that can’t be done by robots or people thousands of miles away.
Consider the industry that’s been all over the news because of President-elect Donald J. Trump’s intervention at the Carrier furnace plant in Indianapolis: ventilation, heating, air-conditioning and commercial refrigeration equipment manufacturing. It actually has not been decimated by foreign competition: Total receipts for U.S. manufacturers of the stuff were up about 4 percent in 2014 from the pre-recession peak in 2008. But the sector, generally known by the acronym HVAC (for heating, ventilation and air conditioning) has shed lots of jobs – about 25,000 since 2008, and 1,000 just in October, according to the latest jobs report.
The data on HVAC mechanics and installers is only collected once a year in May. The BLS expects employment in the field to keep rising at a healthy clip, though, with a projected 331,600 people working as HVAC repairers and installers in 2024.
Getting a job as an HVAC mechanic or installer doesn’t require a four-year college degree, but it does usually require postsecondary training and often a certificate – not to mention a fair amount of skill. This is a common characteristic of what Georgetown University economist Anthony P. Carnevale, in an essay for the Atlantic’s CityLab, called the new “good jobs.” It’s the case even in manufacturing, he wrote, as “factories have substituted workers with a high school education or less for new postsecondary-trained technicians working with powerful information technology.”
A shift in multinational corporations’ approach to globalization may bring a modest “reshoring” wave of new factories in the U.S. But those millions of old-line factory jobs really aren’t coming back. •
Justin Fox is a Bloomberg View columnist.
