Stemming Job Losses
By David S. Broder
Sunday 31 August 2003
The economy is getting better, so the experts say. But this is anything but a joyful Labor Day for the 9 million Americans without jobs or for the businesses that once employed many of them. As the union-backed Economic Policy Institute pointed out in a report last week, "in terms of employment growth, the current recovery is the worst on record since the Bureau of Labor Statistics began tracking employment in 1939."
Instead of the job picture improving as economic activity has accelerated, more than 1 million jobs have disappeared since the recession officially ended. The reason is clear: The manufacturing sector has hit the skids. The number of factory workers has declined every month for three years. From July 2000 until last month, industrial jobs fell from 17.3 million to 14.6 million -- a loss of almost one job in six. And these were, for the most part, good jobs, averaging $54,000 a year.
It has taken a while for this problem to penetrate the consciousness of official Washington. Even now, despite the warnings from both labor and management, many officials seem to think that the economic recovery underway will itself restore a healthy labor market and bring back the vanished jobs.
Governors, who live closer to the everyday lives of their constituents, know better. The issue of industrial job loss was very much on the minds of the state executives who met in Indianapolis earlier this month. Indiana's retiring Democratic Gov. Frank O'Bannon briefed his colleagues on his ambitious plan to stimulate four industrial sectors, with hopes of creating 200,000 new high-wage jobs. The plan was whittled down in the Legislature -- and now the jobs issue dominates the campaign to choose his successor.
No state has felt the loss of manufacturing jobs more than Indiana, but from South Carolina to Washington state, other governors cited examples of whole communities devastated by plant closings.
To many of them, the future appears bleak. "The manufacturing jobs are gone, and they're not coming back," South Carolina Republican Gov. Mark Sanford said with finality. "Just look at the cost of labor in India." Others think something can be salvaged. Mitt Romney, the Republican governor of Massachusetts, said: "Manufacturing has been in decline in our state for over 10 years now. Most of what can be done in China is already being done there. We're pursuing the kind of manufacturing that needs to be done in a high-tech state."
But even high-end manufacturing jobs are facing increased competition, as foreign countries build up their work force skills. The National Association of Manufacturers (NAM), for example, noted last week that "more than a quarter (28 percent) of the U.S.-China trade deficit is now in computers and electronics, the fastest growing manufacturing industry in the 1990s."
Foreign competition is one big piece of the problem. The NAM's president, Jerry Jasinowski, cautions against "a protectionist impulse that would shut us off from the world," but says, "It is time for the administration to get tough with the Chinese."
Rep. Vern Ehlers, a Michigan Republican whose Grand Rapids district has been shedding furniture and auto parts jobs, said that "the refrain at my district meetings has been uniform: China. Jobs. Will the work come back?"
Even free-traders such as Jasinowski and Ehlers complain that the Chinese enjoy a 40 percent competitive advantage because they won't let their currency "float" to a realistic level.
But not all the problems originate abroad. Jasinowski says regulatory and litigation costs and the ever-rising expense of health insurance are squeezing domestic producers who cannot raise their own prices. And government policies designed to help one set of producers can harm others. Sugar duties have driven candy manufacturers from the United States into Canada, and Ehlers says the administration's decision to impose steel tariffs has added to the woes of his industrial constituents, who are steel consumers.
Secretary of Commerce Don Evans is scheduled to announce a Bush initiative for manufacturing at a Sept. 15 speech in Detroit. Meanwhile, the Democratic presidential candidates are zeroing in on the issue. Sen. Joe Lieberman has been out front in proposing a mix of possible approaches, and Rep. Dick Gephardt has used the crisis to spotlight his record as a longtime opponent of the free-trade agreements with Mexico and China.
The United States and its economy have a large stake in international trade -- one that could be lost if policy takes a turn toward the sort of short-term protectionism embodied in the steel tariffs. But the wasting of the manufacturing sector is a large fact of life, far too important to be ignored in pursuit of some economic theory. It is a problem crying out for a solution.
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