Industrial Policy: Bring It On

Policy Paper
July 5, 2011

Amidst the doom and gloom surrounding the labor market, there are bright spots that offer some hope for the return of good jobs in the United States. Foremost among them is the resurgence of employment in durable goods manufacturing.

As reporters for the Columbus Dispatch tell us, the Hoover Vacuum plant in North Canton, Ohio is hiring; V and M Steel in Youngstown is looking for workers for its pipe fabricating plant. Unemployment in the rust belt states of Michigan and Indiana , while still unacceptably high, is trending down for the first time in years. 250,000 jobs have come back to the nation’s factories, the first real increase in manufacturing employment in almost 15 years. Against nearly all expectations – and the resolute antagonism of conservatives toward government intervention – the auto factories have come to life once again and have repaid taxpayers for the loans they received.

Yet we should not look for the return of your father's Chrysler. Manufacturing is more capital-intensive, more productive (more output with less labor) and rests on the shoulders of a more "polarized" work force, with highly skilled managerial and technical workers that are well paid and a low skilled blue collar workforce that is now working for far less than it ever has.

Read the full paper here.