Manufacturing Job Losses Number 2.5 Million

Manufacturing is the problem child of the U.S. economy, according to a recent Washington Post article. Of the 3.1 million jobs lost since President Bush took office, 2.5 million have been in manufacturing.

July was the 36th consecutive month that manufacturing jobs have fallen, the longest stretch since the Depression. But while the past several years have been particularly bad, with manufacturing jobs down 16 percent in three years, the trend lines have been bleak for years.

In the mid-1960s, manufacturing accounted for 30 percent of all jobs; now it's down to 11 percent. That's in part because production has moved overseas, where it can be done more cheaply, in part because of improved technology that's made it easier to create more goods with fewer workers. Indeed, while manufacturing jobs have fallen over the past few decades, manufacturing output has grown.

Is this cause for concern? Some economists don't think so. Federal Reserve Board Chairman Alan Greenspan was uncharacteristically plain-spoken in recent congressional testimony in which he essentially wrote off manufacturing as the job creator of the past. "Ideas," not physical goods, "are becoming increasingly the predominant means by which we create wealth," Mr. Greenspan said. "I think that's good, not bad, for the economy as a whole. But if you're a maker of stuff, it isn't."

Not surprisingly, the makers of stuff and their employees didn't take terribly well to this brush-off. They argue that sustaining a vibrant manufacturing base is essential to maintain U.S. productivity and even national security -- particularly if, as has begun to happen, high-paying, high-skill manufacturing jobs begin to move overseas. National Association of Manufacturers President Jerry Jasinowski dismisses what he calls "the silly notion that we can all be shopkeepers."

My advice: don't give up on your manufacturing base. At the same time, don't expect miracles from it. We need a balanced economy that contains a strong manufacturing component. If we give up on manufacturing, then we are giving up on more than just the "making of stuff." We are giving up on a big part of our knowledge economy.