Relax, America Still Makes Things

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We live in a post-industrial age, defined more by Google than by General Motors. The term "post-industrial society" was first popularized by the sociologist Daniel Bell (1919-2011) in a 1973 book, and the change has generally been a boon. The transition from factory to office has raised living standards, curbed pollution and reduced the number of grueling, often-monotonous jobs. Yet, this largely beneficial transformation suffers in the popular imagination. The vast "service sector," which now dominates the economy, is seen as inferior, low-paying and even frivolous because it produces nothing tangible.

Almost everyone seems to yearn for a manufacturing renaissance. This would, the reasoning goes, solve many problems. It would kick-start the sluggish recovery. By providing well-paying jobs, especially for semi-skilled men, it would strengthen the middle class. By restoring a heritage of "making things," it would reduce U.S. trade deficits and reestablish our global economic pre-eminence. No doubt, millions of Americans endorse this appealing vision. It's make-believe.

To be sure, manufacturing is reviving - and the more the better. Rising wages abroad and heightened anxieties about global supply chains are causing some U.S. firms to relocate production from China or Mexico back to the United States. Cheap U.S. energy costs, reflecting plentiful natural gas, also favor American factories. Though these trends are welcome, they stop well short of a sweeping transformation of the economy. On manufacturing, a huge gap separates public perceptions and economic realities, as Marc Levinson of the Congressional Research Service has shown in several reports.

For starters, manufacturing's decline is misunderstood. The truth is that output has continued to climb. In 2010, Levinson reports, U.S. manufacturing production of nearly $1.8 trillion was the largest in the world; it was slightly ahead of China's, about two-thirds higher than Japan's and nearly triple Germany's. China may now be No. 1, but the United States remains a manufacturing powerhouse. In 2011, near-record output was 72 percent more than in 1990 and six times greater than in 1950. Recall some American-made products: commercial jets, earth-moving equipment, gas turbines. (Output refers to "value added," which is the difference between the sector's purchased inputs and its final products.)

Manufacturing's "decline" refers mostly to job loss, which is stark and long-term. In 1970, the 17.8 million manufacturing jobs represented 25 percent of all 71 million U.S. jobs. By 2012, the 11.9 million manufacturing jobs were only 9 percent of the 133.7 million total. The declines reflect two forces: automation and imports, especially of labor-intensive products. In 2011, Levinson notes, 97,000 steelworkers produced nearly 10 percent more steel than the 399,000 did in 1980. As for labor-intensive products, clothing output has dropped more than 80 percent since 1980, with jobs falling from 1.3 million to 150,000.

For society, this is a mixed bag. People who lost their jobs - or couldn't find one in local plants - were often devastated. Manufacturing's shrunken size also means that it can't single-handedly sustain recovery or cut unemployment. To date, factory jobs have risen 512,000 from their low point; that's only 9 percent of the total increase of 5.9 million. Finally, Levinson notes, automation has eliminated many factory-floor jobs; professionals and managers are almost a third of manufacturers' workforce. Factories will provide less economic and social support for blue-collar workers than in the past.

On the other hand, automation improves the workplace. It replaces exhausting, dangerous or boring jobs. In his book "America's Assembly Line," historian David Nye quotes an early worker at a Ford plant on the demeaning regimentation of factory work: "Henry [Ford] has reduced the complexity of life to a definite number of jerks, twists, and turns. ... When the whistle blows [the worker] starts to jerk and when the whistle blows again he stops jerking." Many electronic assembly jobs outsourced to Asia today are similar: "The assembly line ran very fast," complained one worker for the electronics assembler Foxconn, "and after just one morning we all had blisters."

More important, greater factory efficiency raises living standards. Prices are held down; purchasing power expands. This has enabled Americans to spend more on education, health care, travel, recreation - and much more. Because these activities typically don't require the huge energy inputs of heavy industry, society becomes less energy intensive. This is happening in all advanced nations; since 1973, manufacturing's share of Sweden's employment dropped from 28 percent to 13 percent.

It's a mistake to romanticize manufacturing and disparage services, portraying them as separate economic realms in competition with each other. In reality, they're completely intertwined. Almost all services depend on manufactured products. Air travel requires planes, the Internet needs computers, and health care dispenses pharmaceuticals. And almost all manufactured products generate services. Cars provide transportation, homes give shelter, and films offer entertainment. There's plenty of industry left in post-industrial America.

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