The document discusses the importance of manufacturing for the U.S. economy and jobs. It summarizes trends showing a decline in manufacturing employment from 1970-2010 due largely to rising trade deficits, not productivity. Unfair trade practices like currency manipulation by other countries and their subsidies have contributed significantly. The decline can be addressed by reforming trade policies to curb manipulation, ending subsidies, and providing more support for U.S. manufacturers through job training, R&D funding, and infrastructure investment.

1. WHAT FUTURE FOR U.S. JOBS AND MANUFACTURING?
REVIVING U.S. MANUFACTURING
A Presentation to the Board And Staff of
Interfaith Worker Justice
MONDAY, DECEMBER 10, 2012
Robert E. Scott
Director of Trade and Manufacturing Policy Research
Economic Policy Institute

2. Why is manufacturing important?
• Source of high wage/good benefit jobs for workers without
college degrees.
• Cannot close the trade deficit without exporting more
manufactured goods.
• Best way to bring economic recovery – we need sustained
demand, no bubble.
• One job in manufacturing supports 2-3 additional jobs, eg,
networks of suppliers, R&D, process engineering, etc; the loss of
manufacturing means the additional loss of other high end,
highly skilled jobs.
• Manufacturing is essential to technological innovation.

3. Why is manufacturing important?
Manufacturing is essential
for a healthy economy
with good jobs

4. Manufacturing Trends
What have been the trends in U.S.
manufacturing?

5. U.S. manufacturing employment,
Jan 1970-Oct. 2012

6. The Trend in U.S. Manufacturing
• 1970 – 1998: High manufacturing productivity
growth was offset by rapidly growing demand for
domestic manufactured, so manufacturing
employment was roughly stable.
• 1998 – 2010: 6.1 million manufacturing jobs lost.
• Productivity growth caused only a small share of
the manufacturing jobs lost since 1998.
• Most of the lost jobs were due to the huge rise in
the U.S. trade deficit in manufactured goods.

7. Jobs and the Trade Deficit with China

8. What happened to manufacturing
There has been a big decline in the
growth of value added in
manufactured goods produced in the
US, either for domestic consumption
or export, largely due to a rise in the
value of imports, harming the
economy and workers.

9. The Decline in Manufacturing
Is the decline in manufacturing
the inevitable result of
productivity gains and/or
globalization … so there’s nothing
we can do about it?
• NO

10. The Decline in Manufacturing
What caused the decline in manufacturing?

11. The Decline in Manufacturing
The decline in manufacturing is largely due to
policy choices – today we discuss the two most
important ones.
1.Unfair trade practices
2.Lack of support for the manufacturing sector

12. Unfair Trade Practices: 1
Currency manipulation
• Approximately 20 countries are significant
currency manipulators including China,
Taiwan, Malaysia, Saudi Arabia and
Switzerland
• Eliminating currency manipulation could
create 2.2 million to 4.7 million U.S. jobs over
next two to three years.

13. Unfair Trade Practices: 2
Subsidies / dumping
•China has poured tens of billions of dollars over the past
decade into:
• Steel
• Paper
• Auto Parts
• Solar panels
• Glass
•China’s Steel capacity has increased ten-fold in a decade
• China and many other countries found guilty in
dumping cases (sales below cost) in many products

14. Unfair Trade Practices
There is a conflict of interest between Wall
Street (financial institutions, large retailers,
and ? multinational manufacturers?) and Main
Street.
Our policies support and our politicians are
siding with Wall Street, not our Main Street
manufacturers, but this is not in the best
interests of the people of the US.

15. Unfair Trade Practices
Our trade problems and loss of manufacturing are largely
driven by “Wall Street” corporations (multinational
manufacturers and financial firms) that benefit from other
countries’ unfair trade practices which allow them to
produce cheaply abroad. The Citizens United decision
enhanced the power of MNCs and Wall street firms.
Our trade/manufacturing problem is a political, not
economic, problem.
It is not an inevitable outcome of globalization or
productivity increases in manufacturing.

16. Lack of Support for Manufacturing
Other countries with strong manufacturing
sectors provide support for manufacturers that
we fail to do.
The U.S. could and should support
manufacturing. We’ll discuss specifics in
upcoming slides.

17. What can be done to address unfair trade
practices and provide support for
manufacturing?

18. What Can Be Done re: Unfair Trade Practices
• Eliminate global currency manipulation. Outlaw
purchases of U.S. government securities by
countries that won’t sell their own. This is legal
under the WTO principle of reciprocity.
• End subsidies. The most egregious are illegal
under WTO. We need an independent
government agency to initiate fair trade cases.
• Trading system reform. Revise U.S. general
administrative trade law.

19. What Can Be Done re: Support for Manufacturing
• Increase spending on training and community college
programs
• Increase government R&D (nondefense)
• Greater access to capital for manufacturing firms
• Manufacturing extension service
• Invest in new industries, make commitments to new
products (government purchases)
• Invest in infrastructure: in short term, creates jobs and
increases demand for manufactured goods; in longer
term, boosts private sector productivity

20. Manufacturing in the U.S.
The U.S. can have, and needs to have, a
strong manufacturing sector.
It is a question of power, politics, and
internal U.S. policies that can and must
be changed.

21. Additional Resource
Harold Meyerson, “The Politics of Industrial
Renaissance,” American Prospect December
2009

22. U.S. manufacturing: Growth in real value added
and labor productivity, 1990-2011

23. U.S. manufacturing: Goods trade deficit,
1989-2011

24. U.S. manufacturing: Real value added,
1989-2011

25. Trade and Manufacturing Employment