[lbo-talk] Manufacturing Productivity and the Shifting US, China, and Global Job Scenes -- 1990 to 2005

Yoshie Furuhashi critical.montages at gmail.com
Wed Dec 20 15:49:38 PST 2006


On 12/19/06, Jordan Hayes <jmhayes at j-o-r-d-a-n.com> wrote:
> > are Nissan or Honda tougher nuts to crack than GM in the
> > 1930s or Henry Ford's Ford in the early 1940s?
>
> Hey, maybe people just don't see the benefit. So either it doesn't
> exist, or the unions have done a thoroughly lousy job of being
> convincing.
>
> Why should these shops unionize when the basic issue -- wages and
> benefits -- is moot? Wages and benefits at the "new big three" are
> equivalent to those that the UAW negotiates for the "old big three" ...
>
> Also don't forget, the auto industry is unionized in Japan.

One of the reasons -- aside from employer resistance, which exists across the board, and less-than-adequate campaigns (cf. Kate Bronfenbrenner and Robert Hickey, "Winning is Possible Successful Union Organizing in the United States -- Clear Lessons, Too Few Examples," Multinational Monitor, 24.6, June 2003, <http://multinationalmonitor.org/mm2003/03june/june03corp1.html>) -- is a free-rider problem. Some non-union auto workers at flagship non-union plants get wages and benefits roughly comparable to union workers' because union workers have already set a high industry standard.

Another is probably that many non-union auto workers feel lucky getting auto manufacturing jobs at all, for even without yet better wages and benefits that unionizing can win, their non-union manufacturing jobs come with better wages and benefits than most union private-sector service jobs that SEIU, HERE, UFCW, etc. can get them.

Manufacturing jobs, especially better ones in high-productivity sectors -- are becoming scarcer globally -- workers know that instinctively, I think.

"[B]oth China and the U.S. have lost manufacturing jobs due to rising productivity, but China has lost ten times more -- a decline of about 25 million Chinese jobs from over 54 million in 1994 to under 30 million ten years later" (William H. Overholt, "Globalization's Unequal Discontents," 21 December 2006, <http://www.washingtonpost.com/wp-dyn/content/article/2006/12/20/AR2006122001307.html>).

<http://business.clemson.edu/cit/Documents/Mfg%20Employment%20Working%20Paper%20draft%208%202005.pdf> Manufacturing Productivity and the Shifting US, China, and Global Job Scenes—1990 to 2005

William A. Ward

Professor of Applied Economics and Statistics & Director of the Center for International Trade, Clemson University

Clemson University Center for International Trade Working Paper 052507 (August 4, 2005)

Executive Summary

Summary of Section I Results: Manufacturing productivity growth from 1990 to 2004 should have taken away 7.5 million of the 17.7 million manufacturing jobs that existed in the US in 1990, while GDP growth should have added back (at the new productivity levels of 2004) 5.7 million manufacturing jobs—for a net loss of 1.8 million. In fact, the US economy lost 3.3 million manufacturing jobs during that period, implying that structural and competitive factors shifted 1.5 million of the GDP-growth-implied jobs from the manufacturing sector to other sectors of the US economy. I applied this same "Job Shift Analysis" to the sub-periods 1990-1995, 1995-2000, and 2000-2004 and found striking differences between those intervals in terms of manufacturing employment changes (and job quality changes—Section II). For one thing, more than 80% of the manufacturing job losses by the US economy since 1990 occurred after 2000. I find that 100% of the (3.0 million) manufacturing jobs lost since 2000 were lost to manufacturing productivity growth and that 100% of the (1.8 million) jobs that should have been added back by GDP growth in the US after 2000 were shifted to other sectors of the US economy than manufacturing.

Summary of Section II Results. I analyzed job changes in 12 private sectors (including manufacturing) over the period January 1990 to January 2005. An "Index of Job Quality Change" was constructed to help analyze those shifts, where an index value above 1.0 implies that the net jobs added are higher-pay than the average private sector job in the US, while an index below 1.0 implies the opposite. I found important differences amongst the three sub-periods. The index for 1990-1995 was 0.95; the index for 1995-2000 was 1.03; and for 2000-2005 the index was a shocking 0.16. The contrast between 1995-2000 and 2000-2005 is remarkable. In the earlier of these two sub-periods more than 12.8 million net private sector jobs were added in the US economy (plus 1.2 million in government), with 47,000 of those being in manufacturing (at $16.14/hr) and 3.7 million being in Professional and Business Services (at $17.46/hr, compared to the 2005 private industry average hourly compensation of $15.67). During the 2000-2005 sub-period, in contrast, only 1.7 million net jobs were added by the economy (with 1.1 million of those being in government and 0.599 million in the private sector), including a 3.0 million job net decline in manufacturing employment and the largest net employment gains occurring in Education and Health Services (2.2 million jobs at $16.16/hr) and in Leisure and Hospitality (0.97 million jobs at $8.91/hr.).

Summary of Section III Results. I estimate global manufacturing employment to have been between 150 million and 200 million workers in 2002, with those numbers reflecting a global decline of 20-30 million manufacturing employees in 2002 compared to 1995. I also estimate that China employed between one-fourth and one-half of that global total. Meanwhile, China's manufacturing productivity growth, estimated at 60% between 1995 and 2002, should have cost China 37 million manufacturing jobs over that period, while China's even more rapid GDP growth should have added back 42 million jobs, for a net addition of 5 million manufacturing jobs. Yet, Bannister (2004) reports that China actually lost17 million manufacturing jobs between 1995 and 2002—net job losses that approximated the total US manufacturing employment during that time frame. This suggests that competitive and structural factors were having a profound impact on China's economy between 1995 and 2002, much as competitive and structural factors were affecting manufacturing and overall employment in the US.

Section IV—Conclusions. While certain US manufacturers might compete globally in coming years, manufacturing is not likely to contribute to net job creation in the US the way it did at mid-century. I expect two factors to continue to reduce manufacturing employment globally: (a) Manufacturing productivity growth, and (b) Structural changes in demand away from goods and towards services, at the margin. Current trends reduce global manufacturing employment so rapidly that only two kinds of countries will be able to make GDP Growth-induced and Competitive gains sufficient to offset the Productivity Factor and the Structural changes: (1) Small countries such as Ireland and Canada, and (2) Emerging market economies with "unlimited supplies of surplus labour" coming out of agriculture and out of very inefficient (often state-controlled) manufacturing industries and, thus, having very low opportunity costs.

Section V—Epilogue. Markets and systems of markets in both the 'real' and 'financial' sectors have globalized at rapid rates in the past ten years. Yet, much of the analysis of trade, financial flows and macroeconomic phenomena continues to be conducted in national or—at best—bilateral terms. Analysts who attempt to take a global perspective find themselves "cobbling together" pieces of data to get a look at the entire, interrelated global picture. In this new world of globalized markets and open-economy macroeconomic theorizing, we need new datasets that reflect global economic relations. The appropriate organizations to provide such global datasets are the IMF, the World Bank, and the UN agencies. I would like to see such datasets become important parts of the work programs of these organizations.

-- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>



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