(What’s Left of) Our Economy: Manufacturing Job Growth Kept Slowing Last Month

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737 Max, aerospace, automotive, Boeing, CCP Virus, China, coronavirus, COVID 19, Department of Labor, Jobs, Joe Biden, machinery, manufacturing, medical equipment, non-farm employment, pharmaceuticals, PPE, private sector, stimulus package, tariffs, trade war, Trump, vaccines, Wuhan virus, {What's Left of) Our Economy

The manufacturing employment growth slowdown that began in early summer continued in November, according to the latest monthly U.S. jobs report released by the Labor Department this morning. Moreover, industry’s cumulative employment-creation rate of increase during the CCP Virus rebound period fell further behind that of the overall American private sector.

Domestic manufacturers added a net 27,000 workers to their payrolls in November – the weakest rise since August’s 30,000. As recently as June, such industrial jobs jumped by 333,000. Moreover, revisions were slightly negative. September’s monthly 60,000 gain was unchanged, but the October improvement was reduced from 38,000 to 33,000.

In a return to early rebound-period patterns, automotive employment dominated the November picture for manufacturing, as vehicle and parts makers accounted for well over half (15,400) of the sequential payrolls expansion.

Other job-creation winners for November included plastics and rubber products (4,600 of the total 5,000 job gains for the non-durable goods super-sector); furniture (3,100); and miscellaneous durable goods manufacturing (2,500 – this category includes much virus-related medical equipment, more on which below).

Monthly employment losses in manufacturing were small by sector, but widespread. The worst results were turned in by fabricated metals products (2,000), the big chemicals sector (1,900), primary metals (1,700), and apparel (1,500).

Somewhat encouragingly, the large bellwether machinery sector managed to add to its payrolls, but the increase was just 1,900, and the October rise was revised down from 3,900 to 3,000.

As of November, manufacturing had regained 764,000 (56.05 percent) of the 1.363 million jobs lost during the worst of the pandemic-induced downturn in March and April. Its employment drop during those months represented 10.61 percent of its payrolls level in February – the last pre-virus month.

That rate of improvement is still faster than that of the economy overall: Non-farm payrolls (the Labor Department’s U.S. employment universe) have recovered 12.326 million (55.62 percent) of their March and April losses.

But this economy-wide total was held back by the 99,000 public sector jobs lost in November, due overwhelmingly to the federal government’s release of 93,000 workers hired temporarily to help conduct the 2020 Census. At the same time, state and local government employment levels were little changed last month, and they could wind up implementing major job cuts unless Washington approves CCP Virus relief for them. So the cumulative manufacturing numbers may well continue looking better than the overall non-farm payrolls numbers for the next few months at least, but for all the wrong reasons.

And accordingly, as of November, the overall private sector has regained 12.670 million (59.79 percent) of the 21.191 million jobs it shed during the worst pandemic months.

The employment figures for the CCP Virus-related medical manufacturing categories only go through October, but given the scale of the pandemic and the demand for these products, their jobs gains have been surprisingly negligible since the worst of the virus-induced recession.

For example, the broad pharmaceuticals and medicines sector added only 100 workers on net in October, and has increased its payrolls by only 0.74 percent since February and 1.01 percent since April. It’s true that its job losses were minimal (0.26 percent in March and April). But the recent increases still look meager given the nation’s months-long health emergency.

Within this category, the sub-sector including vaccines hired 600 net new employees in October, bringing its jobs gains to 1.26 percent since February, and 3.42 percent since April – also reflecting modest job losses suffered in February and March. And of course, due to recent announcements of promising vaccines and the likelihood of huge production ramps, the employment picture here will bear close watching in the months ahead.

The employment performance of the manufacturing category containing PPE goods like face masks, gloves, and medical gowns has been stronger. In October, its payrolls expanded by 400, and they’re up 7.38 percent since February, and actually grew slightly during March and April, too.

Of course, numerous wild cards are likely to impact domestic industry’s job-creation record going forward. But their net effect is difficult to forecast now, for any number of reasons. How much bigger will the virus’ second wave become? Will pandemic relief be approved in Washington, and how big will any package be? Will economic growth continue whether such legislation is passed or not?

That vaccine sector doesn’t look big enough to affect overall manufacturing job totals. But resumed production of Boeing’s safety-troubled 737 Max model and of aerospace manufacturing generally due to an overall national and global recovery would be substantial. And finally, will apparent President-elect Joe Biden lift any of President Trump’s steep, sweeping China tariffs? With this many uncertainties still clouding the picture, it could be many months before a manufacturing New Normal emerges – and with it, the prospect of figuring out exactly how healthy or sickly domestic industry’s fundamentals really are.

(What’s Left of) Our Economy: Why Biden’s Immigration-Enabling Goals Couldn’t be Worse Timed

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asylum seekers, California, CCP Virus, coronavirus, COVID 19, Department of Labor, Eduardo Porter, illegal aliens, illegal immigration, Immigration, Jobs, Joe Biden, NAFTA, North American Free Frade Agreement, Open Borders, path to citizenship, Pew Research Center, recession, refugees, services, The New York Times, The Race to the Bottom, wages, Wuhan virus, {What's Left of) Our Economy

Apparent President-elect Joe Biden emphatically and repeatedly told the nation that he’s determined to increase the flow of immigrants to America – whether we’re talking about his promises that will greatly strengthen the immigration magnet (like creating a “roadmap to citizenship” for America’s illegal alien population, tightly curbing immigation law enforcement activities, and offering free government-funded healthcare to anyone who can manage to cross the border lawfully or not), or his promises to boost admissions of refugees, speed systems for processing applications for asylum and (legal) green card applications, and generally “to ensure that the U.S. remains open and welcoming to people from every part of the world….”

During normal recent times such pledges – and the fallout of pre-Trump efforts to keep them – had proven troublesome enough for the U.S. economy and for working class Americans in particular. Inevitably, they pumped up the supply of labor available to U.S.-based businesses, and created surpluses that enabled companies to cut wages with the greatest of ease – exactly as the laws of supply and demand predict.

During the CCP Virus pandemic and its likely economic aftermath, however, this quasi-Open Borders strategy looks positively demented, as emerging trends most recently described by New York Times economics writer Eduardo Porter should make painfully obvious.

According to Porter in a December 1 piece, “The [U.S.] labor market has recovered 12 million of the 22 million jobs lost from February to April. But many positions may not return any time soon, even when a vaccine is deployed.

“This is likely to prove especially problematic for millions of low-paid workers in service industries like retailing, hospitality, building maintenance and transportation, which may be permanently impaired or fundamentally transformed. What will janitors do if fewer people work in offices? What will waiters do if the urban restaurant ecosystem never recovers its density?”

What’s the connection with immigration policy? As it happens, the service industries the author rightly identifies as sectors apparently vulnerable to major employment downsizing are industries that historically have employed outsized shares of immigrant workers (including illegals). And along with other personal service industries, they’re kinds of sectors whose modest skill requirements would continue to offer newcomers overall their best bets for employment.

The charts below, from the Pew Research Center, show just how thoroughly dominated by both kinds of immigrants these sectors, and present similar data broken down by occupation. (The U.S. Department of Labor tracks employment according to both kinds of categories.)

Twenty years ago, in my book The Race to the Bottom, I wrote about news reports making clear that

“immigrants were flooding into California in hopes of landing jobs in labor-intensive industries such a apparel and electronics assembly that NAFTA [the North American Free Trade Agreement] had steadily been sending to Mexico — where most of the immigrants come from! In other words, the state was importing people while exporting their likeliest jobs.” 

And not surprisingly, wages throughout the southern California in particular stagnated.  

If a Biden administration proceeds with its stated immigration plans as quickly as it’s promised (with many actions scheduled for the former Vice President’s first hundred days in office), this epic blunder will wind up being repeated — but this time on a national scale.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(What’s Left of) Our Economy: Productivity as the Main Manufacturing Job Killer Debunked Again

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automation, BLS, Bureau of Labor Statistics, Department of Labor, Jobs, labor productivity, manufacturing, offshoring, productivity, Trade, {What's Left of) Our Economy

Here’s a curious phenomenon that America’s political leaders and media need to focus on more: Practitioners of what I call fakeonomics keep prattling on about how the nation’s trade policy has almost nothing to do with the woes of domestic manufacturing and its workers, and that more automation and other forms of productivity gains are almost entirely to blame. At the same time, the official (and most authoritative) data keep proving them wrong. Just look at the latest figures, from this morning’s government report on America’s labor productivity.

These figures – from the Labor Department’s Bureau of Labor Statistics (BLS) – measure how many hours of human work it takes the U.S. economy to produce a given quantity of output. So although they don’t directly gauge the role being played by machines and software of all kinds in American industries (including manufacturing), they’re no doubt an excellent proxy for automation levels and how they’re changing. In other words, if labor productivity is rising at a respectable rate, then it’s reasonable to conclude that at least lots of job loss is indeed attributable to the adoption of labor-saving technologies – as opposed to more net imports or more job offshoring. And the opposite holds logically, too,

As I’ve written, BLS itself admits that its published numbers likely overstate labor productivity growth for the whole economy – and therefore, it would seem, the automation rate. But even leaving aside this flaw, the new numbers once again show that “respectable” is the last adjective that’s appropriate to describe improvement lately in this gauge of efficiency.

BLS’ new figures for the fourth quarter of 2016 and for that full calendar year incorporate comprehensive revisions going back to 2012. Given how many quarterly and annual figures have been updated, the most efficient way to show how miserable productivity growth has been recently, and how weakly it’s correlated with manufacturing employment, is to show how the previous figures for the last three economic recoveries before the new adjustment and after it. (As discussed before, comparing economic performance during similar phases of a business cycle – e.g., recoveries versus recoveries, or recessions versus recessions – is the best way to get apples-to-apples data.)

Here are the manufacturing employment and manufacturing labor productivity changes for the expansion of the 1990s (as presented in this previous post):

manufacturing employment: -0.38 percent

manufacturing labor productivity: +46.78 percent

And here are the results for the shorter expansion of the 2000s (taken from the same post):

manufacturing employment: -12.44 percent

manufacturing labor productivity: +41.08 percent

And here are the results reported in that post for the current expansion – which has been longer than that of the previous decades, but not quite as long as its 1990s predecessor:

manufacturing employment: +4.68 percent

manufacturing labor productivity: +22.88 percent.

Where do the new revisions leave us? Manufacturing employment is now up 5.24 percent. And the sector’s labor productivity is now up 22.70 percent. In other words, it’s productivity growth has been slightly weaker than previously estimated – when it was already historically lousy.

It’s hard to escape the obvious conclusion: It’s high time for globalization cheerleaders to stop letting trade off the hook for major manufacturing job loss – and transition to work that’s actually productive.