Manufacturing

I’ve been looking forward to this post for a while because I always see a WeatherTech.com billboard that says, “One manufacturing job supports five more U.S. jobs.  We’re doing our part.”  And, me being me, I’ve been dying to dig into that claim.  So, where does that figure come from?  Here’s some background.

Investment in manufacturing creates jobs as most jobs directly or indirectly depend on manufacturing.  The closest support for the billboard fact that I could find came from the National Association of Manufacturers that states that for every 1 employee hired in manufacturing, there are 4 more employees hired elsewhere.  Manufacturers contributed $2.17 trillion to the U.S. economy in 2015.  For every $1 spent in manufacturing, another $1.81 is added to the economy which is the highest multiplier effect of any economic sector.  Manufacturing makes up 9% of the workforce employing 12.3 million manufacturers directly.  It is one of the most important drivers of economic growth.

Manufacturing is the foundation of a strong and prosperous middle class.  According to the Bureau of Labor Statistics and the Bureau of Economic Analysis, in 2014, the average manufacturing worker earned $79,553 annually including pay and benefits while the average worker in all industries earned $64,204.  Not including benefits, the average manufacturer made nearly $26.00 an hour.  Manufacturers have the third highest participation rate in their employer healthcare plans at 84%, following only government (91%) and trade/communication/utilities (85%).

Manufacturing has been called the path to development.  Manufacturers in the United States perform more than three quarters of all private sector research and development yielding more innovation than any other sector.  Pharmaceuticals account for nearly one third of all manufacturing research and development.  Other significant contributors to manufacturing R & D include aerospace, chemicals, computers, electronics, and motor vehicles and parts.  Over the next decade, nearly 3.5 million manufacturing jobs will likely be needed, but 2 million will likely go unfilled due to the skills gap.  

The cost of federal regulations fall disproportionately on manufacturing.  On average, manufacturers pay $19,564 per employee to comply with federal regulations compared to $9,991 per employee throughout all sectors.  Environmental regulations account for 90% of this difference, as manufacturers account for more than 30% of the nation’s energy consumption.

According to PBS Newshour, between 2000 & 2009, close to 6 million manufacturing jobs were lost to “offshoring” or moving production abroad to places such as China and Mexico.  Rising labor costs abroad, combind with increased shipping costs, lowered energy costs in the U.S., and federal and state incentives are causing some manufacturing jobs to “re-shore” to the United States.  The Reshoring Initiative estimates that between 2009 & 2016, more than 250,000 jobs were brought back to the United States.

Here is a look at the candidate’s plans to strengthen manufacturing.

Clinton:  Clinton plans to strengthen manufacturing through a $10 billion dollar investment in “Make it in America” partnerships.  Businesses that take part in these partnerships will pledge not to ship jobs or profits overseas.  She will create tax incentives to encourage investment in communities that have faced or are about to face manufacturing job losses.  She will crack down and create incentives to bring jobs back to the U.S.  She will expand apprenticeships and training programs in manufacturing to stay competitive globally.  I’ve previously discussed her proposals to invest renewable energy and infrastructure which will drive demand for manufacturing further.

Experience:  From correcttherecord.org:  “Hillary Clinton introduced bills to bring new manufacturing technology to small and medium-sized businesses. She called for doubling the funding for Manufacturing Extension Partnerships, public-private partnerships that help manufacturers, and proposed expanding them to focus on renewable energy. Hillary worked across the aisle to challenge the Bush Administration’s cuts to these partnerships and she also cofounded the bipartisan Senate Manufacturing Caucus.”  She co-founded the Bipartisan Senate Manufacturing Caucus along with Republican Senator, Lindsey Graham, to focus senate attention on the issue of manufacturing.

Trump:  Trump is notorious for not making things in America, but also criticizes companies that do the same.  He has threatened to impose tariffs or taxes on companies that move their manufacturing overseas.