The Manufacturing Myth
Robert B. Reich

Suddenly, manufacturing is back -- at least on the campaign trail. But don't be fooled. The real issue isn't how to get manufacturing back. It's how to get good jobs and good wages back. They aren't at all the same thing.

Republicans have become born-again champions of American manufacturing.

Mitt Romney says he'll "work to bring manufacturing back" to America by being tough on China. Rick Santorum says manufacturing is "vital to the health of society," and vows to get it back by eliminating corporate income taxes on manufacturers.

President Obama also wants to get manufacturing. His plan, unveiled last month, is to eliminate tax incentives for companies that move offshore and to create new lures for them to bring jobs home. "Our goal," he says, is to "create opportunities for hard-working Americans to start making stuff again."

Meanwhile, American consumers' pent-up demand for appliances, cars and trucks has created a small boomlet in American manufacturing -- setting off a wave of hope and nostalgic patriotism perfectly captured in Clint Eastwood's Super Bowl "Halftime in America" spot.

But American manufacturing won't be coming back. Although 404,000 manufacturing jobs have been added since January 2010, that still leaves 5.5 million fewer factory jobs today than in July 2000.

The long-term trend is fewer and fewer factory jobs. After World War II, one in three Americans was employed in manufacturing; today it's one in eight.

Even if we didn't have to compete with lower-wage workers overseas, we'd still have fewer factory jobs because the old assembly line has been replaced by numerically controlled machine tools and robotics.

Manufacturing is going high-tech, and as a result its productivity has skyrocketed -- meaning fewer jobs.

Bringing back American manufacturing isn't the real challenge, anyway. It's creating good jobs for the majority of Americans who lack four-year college degrees.

Manufacturing used to supply lots of these kinds of jobs, but that was because factory workers were represented by unions powerful enough to get high wages.

That's no longer the case. Even the once-mighty United Auto Workers has been forced to accept pay packages for new hires at the Big Three of only $14 an hour -- half what new hires got a decade ago, and about the same as most of America's service-sector workers. GM just announced record profits, but its new workers won't be getting much of a share.

If there's a single reason why the median wage has dropped dramatically for non-college workers over the past three and a half decades, it's the decline of unions. In the 1950s, more than a third of American workers were represented by a union. Now, fewer than 7 percent of private-sector workers have a union behind them.

How do the candidates stand on unions? Romney vows to pass so-called "right-to-work" legislation barring job requirements of union membership and payment of union dues -- a proven way to bust unions. "I've taken on union bosses before," he says, "and I'm happy to take them on again." When Romney's not blaming China for American manufacturers' competitive problems, he blames high union wages.

Santorum says he's supportive of private-sector unions, and while in the Senate voted against a national right-to-work law (Romney is now attacking him on this). But Santorum isn't interested in strengthening unions, and he doesn't like them in the public sector.

President Obama praises "unionized plants" -- such as Master Lock, the Milwaukee maker of padlocks he visited last week, which brought back 100 jobs from China. But the president has not promised that if re-elected he'd push for the Employee Free Choice Act, which would make it easier for workers to organize a union. He had supported it in the 2008 election but never moved the legislation once elected.

The president has also been noticeably silent on the labor struggles that have been roiling the Midwest, from Wisconsin's assault on the bargaining rights of public employees through Indiana's recently enacted right-to work law -- the first in the Rust Belt.

The fact is, American corporations -- both manufacturing and services -- are doing wonderfully well. Their third-quarter profits (the latest data available) totaled $2 trillion. That's 19 percent higher than the pre-recession peak five years ago.

But American workers aren't sharing in this bounty. Although jobs are slowly returning, wages continue to drop, adjusted for inflation. Of every dollar of income earned in the United States in the third quarter, just 44 cents went to workers' wages and salaries -- the smallest share since the government began keeping track in 1947.

The fundamental problem isn't the decline of American manufacturing, and reviving manufacturing won't solve it. The problem is the declining power of American workers to share in the gains of the American economy. Stronger unions are needed -- in both manufacturing and in services.