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Why Trump Failed and Biden Will Fail to Bring Manufacturing Jobs Back

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32 comments on Why Trump Failed and Biden Will Fail to Bring Manufacturing Jobs Back

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What About That Giant Sucking Sound?

The decline in US manufacturing is not related to NAFTA which was signed in 1992 but not effective until 1994. 

By then, the US had already started to lose manufacturing jobs. China did not join the WTO until December 2001. 

Undoubtedly, China’s entrance into the WTO accelerated the decline in US manufacturing, but even China is losing jobs to improved manufacturing productivity. 

Manufacturing Jobs Stabilized

US manufacturing productivity peaked in October of 2007, right before the Great Recession started. 

Manufacturing employment bottomed at 11.455 million in the first quarter of 2010. That’s right about when productivity stalled during the Great Recession Recovery. 

US Manufacturing Productivity Is Falling and It’s Cause for Alarm

On July 12, 2021 IndustryWeek reported US Manufacturing Productivity Is Falling and It’s Cause for Alarm.

The U.S. economy has been in a productivity depression for more than a decade, suffering from a historically unprecedented slowdown in labor productivity growth. The issue is finally getting attention, at least among some scholars and think tanks.

Some will claim measurement error. This seems dubious given there was very little difference in what was produced in the 2000s and the 2010s, and BLS methodologies did not significantly change. Even if there is some mismeasurement, it cannot account for the fact that overall manufacturing productivity growth fell from 41% growth in the 2000s to a 4% decline in the 2010s.

What about new technologies we keep hearing about, framed in terms as “Industry 4.0” and the “Second Machine Age”? Leaving aside that the best way to sell books and give Ted Talks is to exaggerate the pace of technological change, the reality is that these technologies are still in the early part of the “S” curve. They are often costly, with limited performance. This is one reason why few companies are adopting them. As ITIF found in a 2019 survey of over 100 mid-sized U.S. manufacturing companies, just 5% of the companies have mapped where AI opportunities exist and developed a clear strategy for sourcing the data that AI requires. And 56% of companies had no plans to do so.

Another reason, perhaps the main one, is likely that much of the “low-hanging” fruit in manufacturing was already “picked” in prior decades. It is now a lot harder to seek out efficiency gains, given how efficient many factories already are.

Year-Over-Year Manufacturing Productivity 

Low Hanging Fruit

The above chart is from the Fred Data Series Manufacturing Sector Labor Productivity.

The chart was updated on March 23, 2021 but the year-over-year data ends at 2019.

For 5 of the last 6 years and 6 of the last 8 years (ending in 2019) manufacturing productivity has been negative. 

That more than anything else explains why the number of manufacturing employees stabilized then increased slightly.

Long-term, it’s probably not wise to bet against a future upward increase in productivity. 

Don’t Count on Biden

The charts suggest that when productivity improves, manufacturing employment will at best stay relatively flat. 

So don’t expect Biden to be any more successful than Trump was in bringing manufacturing jobs back to the US.

And if Biden actually gets his wish of 80% clean energy by 2030, expect a stagflationary global trade war, not the revival miracle he promises.

How to Avoid a Carbon-Based Global Trade War

Avoiding a trade war is easy. I outline the process here: How to Avoid a Carbon-Based Global Trade War in Simple Steps

Hope For Nothing But Expect a Mess

If anything happens in Congress that gets Biden’s $3.5 trillion bill off the ground it will be a guaranteed mess.

There is no way the WTO or anyone else will resolve it, and the bill itself is stagflationary.

The best thing that can possibly happen is nothing. Anything else is a mess.

Mecall my July 15 article The Greens Hijack Biden’s $3.5 Trillion Budget Proposal (That Could be a Blessing)

Blessing?

My idea was the bill was so loaded with garbage that it might sink everything.

Odds of Nothing Improve

Fortunately, the odds of nothing have greatly improved.

For details, please see Senator Manchin Seeks “Strategic Pause on Reconciliation” Did Biden’s Budget Just Die?

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32 Comments
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FromBrussels
FromBrussels
4 years ago
Like I said so many times before , there is ONLY ONE problem on our sophisticated, automated, consumerism driven, by now half destroyed  planet : OVERPOPULATION !  It is fn incredible that common sense won t just take off its fn blindfold  and SEE for once and for all what s going on, merely because we cannot deal with more than 2 fn quarters of negative growth or the ‘system’ will fall apart,  within the context of a insane over the eyeballs, vicious circle endebted, sick Ponzi Scheme paradigm !  Hopefully a combination of uncontrollable pandemics and poisonous natural immunity undermining shots will sort things out….It is gonna be very TOUGH of course,  this time even the US won t be safe at he other side of the pond for a change…But we should  love our nice (perverse evil) specimen and its glorious future, which should be worth any imminent sacrifice we might be facing, because we fn love each other and our fn future generations, don t we ?? …for that s what we are ,NOBLE, Gowd created creatures! I n ALL aspects! Aren t we ?
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amalagoli
amalagoli
4 years ago
To bring manufacturing back to the USA, we must first end the financialization of the economy. Start by banning shares buybacks and force CEOs to actually work for a living, come up with ideas for investment and business improvement. Also stop foreign tax heavens. Too easy now to implement accounting gimmicks rather than do real work.
The libertarian/conservative myth that unregulated free markets can solve the problem has been nothing but an excuse for CEOs to exploit shortcuts and undermine the growth of the real economy and shared wealth creation. Capitalism does not mean “winner takes all”.
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StukiMoi
StukiMoi
4 years ago
Reply to  amalagoli
Problem is, you cannot have anything even resembling neither capitalism nor free markets nor freedom at all, as long as all wealth is simply being redistributed willy-nilly by central bank debasement. Instead, no matter what else you do, once you have central banks dong their redistribution, all you have is a command economy where all resource use is being allocated by rank idiots on Fed welfare.
It makes not one whit of difference whether you hand management of all resources to nominal five year planners the Soviet way, or you hand it to illiterate “Private Equity”, “Fund managers” or “investors” by central bank redistribution. In both cases, what you end up with is exactly the same: Malinvestment, and nothing but.
So just as the Soviets ended up with noone doing labor, because being a labor organizer was more lucrative and comfortable; no American does manufacturing, since, in the FedAge, living off of rent seeking is more lucrative and comfortable. While the dwindling group who still try to produce something, are forced to pay for all the leeches, by way of the central bank redistributing the earnings of productive people to the leeches. 
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randocalrissian
randocalrissian
4 years ago
Reply to  StukiMoi
LOL you are a pure capitalist’s perfect victim. Wealth is continuing to increasingly be concentrated in the hands of a few wealthy people and corporations. For all the “wealth redistribution” your supposed socialist overlords disburse, it’s funny how they never have more money, and it all ends up in the rich’s pockets. Yet you seem to reserve your disdain for the destitute. Hopefully I read you all wrong.
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StukiMoi
StukiMoi
4 years ago
Reply to  randocalrissian
“Wealth is continuing to increasingly be concentrated in the hands of a few wealthy people and corporations.”
Which is exactly what anyone even remotely literate realizes is the inevitable result, when those who work to create value receive $1000 for their work, while at the same time a central bank prints up 1million of those exact same dollars and hand it out, in exchange for no work at all, to a bunch of utterly useless dregs scattered around “Wall Street” and other invariably net-negative FIRE rackets. Those are the guys “Wealth is continuing to increasingly be concentrated in the hands of.” You are aware of what mechanism “Wealth is continuing to increasingly be concentrated” by, right? (I’m allowed to be optimistic……)
But, one of those other things anyone even remotely literate also realizes is that: Media coverage tilted one’s own way, is also just another perfectly normal economic good: You get what you pay for. Meaning: those 1 million of freshly printed dollars buys you plenty of drivel spouted by self proclaimed “experts” babbling nonsense about how it is somehow “capitalism” who is at fault. Rather than an institution which flat out and straight up does nothing whatsoever, except redistribute working people’s wealth to rank idiots doing nothing of value.
If you ended the Fed and brought dollars back to $20/oz, as was the case before the systemic theft began; by the end of the week, there would be virtually no wealth concentration whatsoever. It ain’t that hard. Mathematically guaranteed (which I suppose don’t mean much to those who can nether count nor add).
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amalagoli
amalagoli
4 years ago
Reply to  StukiMoi
This is a typical comment I see. Still trying to blame some socialist conspiracy for what is a problem of crony capitalism where wealth is being concentrated in fewer and fewer hands. Do not blame the Fed for a problem that originates within the private sector. The Fed is only subservient to special interests, it is not per se the starting point of the problem. 
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StukiMoi
StukiMoi
4 years ago
Reply to  amalagoli
“The Fed is only subservient to special interests, it is not per se the starting point of the problem. “
The way those “special interests” have obtained ALL their wealth, is specifically because The Fed has printed up, and handed to them, in exchange for exactly zero productive work on their behalf (96+% accurate… And rising. I Know Page and Brin did at least   something), every dime of their current, and future, “concentrated wealth.”
Debasement is the mechanism by which redistribution is effectuated in financialized dystopias. It serves the exact same role as direct confiscation did in the Soviet Union. The two are not, in any way, different at all, as far as economic effects go. In both cases, real wealth created by work, is confiscated. To be handed out to regime connected abject nothings serving no purpose whatsoever, yet still somehow flying around in private jets and driving in separate lanes.
Get rid of the institution which transfers working people’s earnings to connected backmarkers, and you will, as a matter of simple arithmetic, simultaneously have both wealthier working people, and less concentrated wealth among the connected backmarkers. It’s called basic arithmetic. Used to be taught (although obviously not often understood) in schools. Back before nonsensology became the dominant science of the land.
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LawrenceBird
LawrenceBird
4 years ago
Your observations are not politically expedient and thus will be ignored. 
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KidHorn
KidHorn
4 years ago
Creating a mostly automated factory only makes sense when producing thousands or millions of the same thing. It doesn’t make sense when producing a thousand or fewer items, which is the bulk of what gets produced. All the big factories have already been mostly automated.
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Maximus_Minimus
Maximus_Minimus
4 years ago
Reply to  KidHorn
You can also say that the low hanging fruit has been picked, and now the automation is incremental, which explains the productivity stagnation.
What couldn’t be easily automated has already been outsourced, and is not coming back.
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Casual_Observer2020
Casual_Observer2020
4 years ago
In a globalized economy it will be hard to look at jobs within borders. Despite the desperation for middle class revival under Trump or Biden or anyone, it will never happen. 
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StukiMoi
StukiMoi
4 years ago
Reply to  Casual_Observer2020
The desperation of the middle class, arise solely because they are the ones being robbed in order to both keep the deadweight leeches “on top” in unearned  splendor, as well as fund the various social experiments those dunces like to run on the derelicts at the bottom.
If you do as Trump advised and “Stop the Steal”, (too bad Trump had not even the remotest idea how “The Steal” he was talking about is being perpetrated. But then again what else is new in dystopia? Not one man in a million, as Keynes noted…)  you also stop middle class desperation.
Middle class Americans have access to more capital now than at most times prior. Hence can add more value. Hence wold be paid more in a free economy. It’s just that even twice the capital, don’t make up for the sheer amount of debasement driven theft they are forced to suffer under, just so a bunch of rank retards producing nothing, can sit around and pretend their randomly allocated “portfolios” and the mold in the wall of their “home” magically produce value for them.
But, Stop the Steal, and middle class Americans will live better now than at any time at least since 1980 or so. While rent seeking leeches, on and off “Wall Street,” will have to find a real job, and perhaps get some skillzzzz…
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Tengen
Tengen
4 years ago
During the Trump years it was strange to hear people say with conviction that manufacturing would return on a large scale. That was always an absurd claim.
Cheap labor will continue to be irresistible until either wages begin to level out globally or instability in cheap counties becomes unbearable. Until then, manufacturing will be overseas and I will keep talking to fellow IT workers in India multiple times every day.
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randocalrissian
randocalrissian
4 years ago
Reply to  Tengen
Trump could proclaim he won the trade wars 100% and brought back the biggest manufacturing surge in America’s history, and 40% of our people would believe it hook, line, and sinker.
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QTPie
QTPie
4 years ago

US workers are pretty expensive, companies can find better skilled labor overseas, plus the US is the only industrialized country where employers are burdened with finding, administrating and paying for healthcare solutions for their employees (and having to do so in a very high medical cost environment). It’s not difficult to see why businesses prefer to manufacture elsewhere.

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davebarnes2
davebarnes2
4 years ago
Reply to  QTPie
cf. Deutschland as a better environment
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LawrenceBird
LawrenceBird
4 years ago
Reply to  QTPie
Health care costs (including administration on the corporate side) show up as a reduction in wage/salary.  Or are you seriously trying to argue that Jamie Dimon is giving Chase employees medical out of the goodness of his heart?
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StukiMoi
StukiMoi
4 years ago
Reply to  QTPie
“US workers are pretty expensive”
Not just US workers. More generally, the total cost of building, maintaining and staffing a factory in the US.
Very little of that cost end up as free and clear money with the worker.
And that’s the problem: Not how much US workers end up with, but rather how much is pilfered off by everything from debasement to taxes to mandates to healthcare, to rent, to insurance, to legal fees to lobbying costs to who nows what nonsense.
It’s virtually impossible for US manufacturing workers to produce enough value to fund that entire superstructure of dead weight. Hence manufacturing moves to places with less dead weight. Even some/many where the net amount which goes to the actual worker, is substantially higher than in the US, like Germany.
Upside is, that the nonsense that what prevents manufacturing from taking place in the US is that the manufacturing workers themselves make too much, is just that: Nonsense. Get rid of the rest of the pilfering, and it’s plenty cheap enough to manufacture competitively in the US, even with very good wages. Those living off the pilfering, will have to find real jobs, though. Which is the real sticking point.
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Mish
Mish
4 years ago
I have no freaking idea what is in the filter or not. I do not control it. Apologies offered. 
Nor am I a moderator of comments, something I have complained about.
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anoop
anoop
4 years ago
once a tiger has tasted human blood, there’s no going back to regular animals, even if it must put its life at risk.
it’s same with manufacturing.  once companies have taste cheap, hassle free (from an employee rights standpoint) chinese manufacturing, there is zero appetite for expensive usa-based manufacturing.
the entire way business is done in the usa has changed.  you manufacture for nothing and build your business on marketing and financial engineering.  cost of goods is probably close to 1% of selling price.
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dguillor
dguillor
4 years ago
I don’t dispute any of what you have said, but I think another factor is the short term perspective of the executives. It’s probably more profitable in the short term for them to buy stocks than to invest in R&D. I think it’s a real problem because the best in the short term probability is not the best in the long term.
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silverdog148
silverdog148
4 years ago
Manufacturing that requires intensive labor is not coming back to the USA as long as a high cost of living is present in the United States. 
Even with China out of the picture , Mexico still remains in the picture which can pick up any manufacturing slack.
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LawrenceBird
LawrenceBird
4 years ago
Reply to  silverdog148
Not soley intensive labor – intensive unskilled labor.
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silverdog148
silverdog148
4 years ago
Reply to  LawrenceBird
Skilled or Unskilled , the USA no longer has a monopoly on Skilled manufacturing, manufacturing for consumer products is not coming back to the USA under the current world order. Manufacturing important to national security may come back to the USA/further in-shored as world conflict/wars are on the horizon but that’s about it.
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Six000mileyear
Six000mileyear
4 years ago
COVID and the supply chain disruption it created were eye-openers. Even Taiwan’s drought has case the entire global auto industry to stall. China is definitely flexing its military muscle. There is too much risk to wish or attempt to negotiate away. Government spending can’t grow the economy, but requiring 95% of the goods sold in the US to be made in the US would induce private sector job creation. At first jobs will appear in factory automation, then in manufacturing processes that cannot be automated. There will be an incremental increase in transportation to get raw materials to factories, but fulfillment should be fairly steady.
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LawrenceBird
LawrenceBird
4 years ago
Reply to  Six000mileyear
The auto industry are victims of their own hand.  Was the semiconductor industry supposed to stand idle waiting for Ford, GM, etc to place orders again?  Of them it seems only Toyota actually kept significant levels of inventory for critical chips as well as expanding vendors.  If not for the stock market bubble, shareholders would be suing Ford and GM en masse for gross supply chain incompetence.
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conservativeprof
conservativeprof
4 years ago
Trump’s policies (tax and regulatory) encouraged lots of businesses to bring profits back to the USA. Manufacturing is difficult to relocate. Trump’s tariffs may have worked in the long run at least to move away from so much China dependency.
Biden’s policies will cause capital flight and less business investment. His tax and regulatory policies are horrendous. He has even proposed to eliminate loss carryforwards. His labor policies will scare away manufacturing. Who wants a a labor cartel dictating business policy. His energy policy will sharply increase production costs. Biden will unilaterally commit the USA to a extremely risky energy policy leading to much higher rates and lower reliability.
The USA recovery is somewhat due to Trump’s policies remaining in effect. Democrats have not yet passed their legislation for taxation, energy, and labor.
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Tengen
Tengen
4 years ago
Reply to  conservativeprof
USA recovery??? Let me run multi-trillion dollar deficits and I bet I could construct a Potemkin village more convincing than the one we’re in.
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conservativeprof
conservativeprof
4 years ago
Reply to  Tengen
I agree that the recovery seems fragile. I see asset bubbles everywhere fueled by reckless government spending and disgusting interest rates. Inflation has poked its ugly head with potential for much worse. The economy seems on a band aid with seemingly permanent imbalance between production and consumption. Demand is white hot but production is restrained by the pandemic and shortages, particularly labor. Potential for a long-term ugly situation.
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nkirby
nkirby
4 years ago
I do believe that, in terms of manufacturing jobs, automation is the key driving of a decline in jobs.
Mish, do you have data to support this belief?
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Mish
Mish
4 years ago
Reply to  nkirby
My interpretation is the same as yours. It’s just increasingly hard to further automate. That said, we will not stagnate forever, there will be new productivity enhancements even if we do not know what they are. 
There will be new jobs too, even if we do not know what they are. Realist is correct on that score, and I never said or suggested otherwise.
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