If this is a renaissance, give me the Dark Ages. Well not literally, but the May jobs numbers just released by the Labor Department just add to the mountain of evidence that, far from enjoying or verging on an historic structural rebound, American domestic manufacturing is still suffering big structural weaknesses. Yes, we’ve had a jobs snapback from recession-era lows. But the new data make painfully clear that the rebound has been cyclical, rather than structural. That is, it simply reflects the overall economy’s bounceback from a terrible slump, not qualitative improvement.
In fact, the big takeaways from the May data are that manufacturing jobs are being restored as such a slow pace that the sector’s share of total U.S. employment has sunk to another all-time low; and that nondurable goods manufacturing (which includes products like paper and chemicals and plastics and processed food) is back in a jobs recession.
Here are the main manufacturing specifics revealed by the new May jobs numbers — which like their predecessors, will be revised at least twice. The month’s manufacturing jobs gain was pegged at 10,000. Yet the Labor Department also revised April’s initially reported 12,000 manufacturing employment increase down by 8,000 (to 4,000), and March’s reported increase down by 3,000 (from 7,000 to 4,000).
As a result, as a share of total U.S. employment (8.73 percent), American industrial jobs not only hit a new record low, but remained below the levels they reached even during manufacturing’s absolute employment nadir in February, 2010 (8.86 percent).
Manufacturing has now recouped 646,000 (28.17 percent) of the 2.293 million jobs it lost from the last recession’s onset in December, 2007 through its employment bottom in February, 2010. By contrast, the total nonfarm sector of the economy – the Labor Department’s U.S. employment universe – has now regained 99.51 percent of the 8.695 million jobs it lost from December, 2007 through February, 2010. In other words, the total U.S. jobs recovery has been more than 3.5 times stronger than the manufacturing jobs recovery.
Manufacturing’s year-on-year jobs growth continues to show some acceleration this year. Between May, 2013 and last month, the sector gained 105,000 net new jobs – up from April’s downwardly revised 88,000, March’s downwardly revised 78,000, February’s 77,000, and January’s 79,000.
Yet through May, manufacturing’s average year-on-year monthly job gain has been only 86,000 – much less than the 109,400 level for 2013 and the 215,600 level for 2012.
Lots of public policy improvements are needed to turn the tide, but in my opinion, the place to start is with overhauling the nation’s approach to international trade. After all, manufacturing dominates America’s trade flows, and trade agreements and the rest of U.S. trade policy deserve major blame for the huge — in fact, record — deficits the sector keeps running. Just as important, trade defcit reduction is a way to speed up economic growth and job creation without worsening America’s badly damaged finances. It requires neither tax cuts nor more government spending — both of which saddle the economy with more debt, at least when you measure such developments on a static basis. Even better, the growth and employment gains produced by lower trade deficits would actually reduce the national debt by expanding the tax base (the economy’s levels of taxable activity). And the effects of smaller trade deficts would be heavily concentrated in the private sector — which is the nation’s best hope for restoring genuine economic health.
More’s the pity, then, that President Obama is trying to negotiate sweeping new trade deals that are modeled on past failures — and that therefore are likeliest to supercharge the trade deficit. And he’s being egged on by Congress’ Republican leaders, along with the multinational business interests that have benefitted from these agreements at the expense of the domestic economy. And people wonder why I’m still so thoroughly bearish despite all the talk of green shoots and imminent economic takeoff.