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May 13, 2012 2:06 PM The importance of a strong manufacturing sector to our economy … and our democracy

By Kathleen Geier

This past week, the U.S. Depart of Commerce published an interesting report about the importance of the manufacturing sector for the U.S. economy. Manufacturing, says the report:

is a cornerstone of innovation in our economy: manufacturing firms fund most domestic corporate research and development (R&D), and the resulting innovations and productivity growth improve our standard of living.

Also very important is the fact that manufacturing jobs tend to provide higher pay and better benefits than their nonmanufacturing counterparts:

After controlling for demographic, geographic, and job characteristics, manufacturing jobs experienced a significant 7 percent manufacturing wage premium. In other words, all else being equal, workers in manufacturing tend to earn 7 percent more per hour than their counterparts in other private industries.
[Snip]
Manufacturing workers are more likely than other workers to have significant, highly-valued employer-provided benefits, including medical insurance and retirement benefits. Taking these into account increases the manufacturing compensation premium to 15 percent.

The report minds me of an intriguing argument Thomas Geoghegan makes in Were You Born on the Wrong Continent?, his book about European social democracy. Geoghegan makes several arguments for why the U.S. should develop an economic policy that encourages the creation of more high-skill manufacturing jobs and a stronger industrial base. But his most interesting pro-industrial argument is that, as he says, “without an industrial base, a democracy dies”:

An industrial base makes it easier to organize a labor movement. And a labor movement makes it easier to keep a social democracy in which people have a stake. Look at the voting rate in both the UK and the U.S., which wrecked their middle-class industrial bases. Then compare it with that of France and Germany, which did not. The more manufacturing there is, the more truly specialized skills people have. They’re “numerically” literate, not just facile with words.
Why is that good for democracy? When people get numerical-type skills, they have in effect assets or stakes to protect. They are “experts,” in a way, with a sense of self-worth. That’s why at least they will go out and vote. Besides, as long as there is an industry, at least there will be a labor movement, to pull them into civic life. (pp. 111-112)

I would need more information to evaluate this theory before I would fully sign on to it. But it certainly is a provocative one, and I strongly suspect it is true.

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

Comments

  • DAY on May 13, 2012 4:45 PM:

    Let's not for get Agriculture.
    Not a high wage portion of the economy, but it brings mega bucks into the country.
    (California's number one export is walnuts/almonds.)

    http://en.wikipedia.org/wiki/List_of_countries_by_real_population_density_(based_on_food_growing_capacity)

    We still have far more arable land that the rest of the world, which will be cashing in the bank as the century progresses (ditto potable water.)

  • TCinLA on May 13, 2012 6:21 PM:

    What? You mean to say the machinations of the Financial Psychopaths of Wall Street isn't the most important part of everything else in the world????

    Who'd a tunkit?

  • Rick B on May 13, 2012 7:22 PM:

    @Day

    Forget agriculture. There is less than less than 3% in agricultural work. This is down from prior to WW II when the majority was still in the agricultural work force. The American work force has left the farm (two generations ago) and moved into much more productive and more specialized jobs in cities.

    That, by the way, is also why Mexicans have been moving to the U.S. until the great recession. American factory farms have been swamping Mexican agriculture and eliminating farming jobs there while the Mexican economy was not creating industrial jobs in cities. Young people who wanted to start families had to move where the jobs in cities were - the U.S.

    The Republican-initiated Great Recession has stopped that. For now, at least.

    I suggest that you look at Obama Versus Romney Offers a Clash of Capitalisms. Jonathon Alter discusses the advantage of creating human capital rather than the very sterile and socially useless financial capital.

    Every modern society is built on a bedrock of manufacturing.

  • Daddy Love on May 13, 2012 7:33 PM:

    Change is here---the question is, what are we going to cope?

    The CIA word fact book has the US economy as:
    agriculture: 1.2%
    industry: 22.1%
    services: 76.7%

    So, love "manufacturing," hate it, or feel neutral, it's not in the driver's seat. Although I do agree with Matt Yglesias that the way we make these divisions probably unrealistically skews these percentages.

  • superdestroyer on May 13, 2012 7:56 PM:

    Does anyone think that a country that is not competent enough to build a pipeline, a high-tension powerline, a damn, a nuclear power plant, a refinery, or a train line.

    A country with more than one million lawyers is probably not capable of maintain a competitive edge in the world marketplace.

  • RT on May 13, 2012 10:26 PM:

    To borrow from The Hitchhiker's Guide to the Galaxy, the US is becoming the "B" Ark.

  • Citizen Alan on May 14, 2012 12:20 AM:

    You talk like this is a bug and not a feature. Every stupid and/or evil decision forced on the American people by the Republicans and their plutocrat masters makes perfect since once you acknowledge that they hate our democracy and want nothing more than to destroy it. If the GOP had its way, we'd have a poll tax enacted in time for the 2012 election.

  • Anonymous on May 14, 2012 11:30 AM:

    @Daddy Love

    It's not that "industry" is the majority of the American economy. It's that the industrial sector is the one that most massively improves all the rest. It's the base of many of the most important services and it's also the base from which labor can defend itself from the predatory financiers and capitalists.