Manufacturing currently accounts for just about 10% of the jobs in the United States. In 1910, 32% of jobs apart from agriculture were in manufacturing. Would it be better for Americans if more of our labor force was in manufacturing?
McKinsey & Co. claims that increasing manufacturing jobs would help with the problem of inequality. It doesn’t seem at first blush as though 1910 was a model of equality across the United States, so where do they get that idea?
Manufacturing jobs pay better than service jobs, overall, and they don’t require extensive (and expensive) education. Today’s new grads and those still in school are worried that they won’t earn enough to pay back their student loans, and all those history majors working as baristas make their concerns seem realistic.
People working in manufacturing in Arkansas, for example, earn an average of $27,644 a year. Those in hospitality rake in $18,686 on average. Retail workers earn $21,787 a year on average. Fast food workers made $19,294. There are higher and lower salaries in each of these fields, but it’s generally true that people without advanced degrees or specialized training will make more in manufacturing than in other jobs.
High and low
Increasing automation has caused a loss of middle-wage jobs in manufacturing. High wage jobs for engineers and robotics specialists have increased. Entry level jobs are cheap enough for manufacturers that they are not worth automating. Middle wage jobs requiring a middle level of skill are the jobs that are being taken over by machines.
But this is true not just in manufacturing, but in all fields. Manufacturing continues to pay more for entry-level or low-skilled jobs than other fields. Economists have seen a direct correlation between the decline of manufacturing and the rise of income inequality.
Manufacturing also supports overall economic growth. This is where technological innovation comes from, where productivity rises, where money comes into a community instead of just washing around the community.
The saying “A rising tide lifts all boats” has some truth to it. Communities that have manufacturing jobs rather than just service jobs tend to be more prosperous. Greater prosperity leads to more jobs and better pay.
A lack of prosperity in a community is hardest on the people who are already at a disadvantage.