Changing Work for a Changing Economy: Looking to the Future, Not the Past

05/05/2016 01:58 pm ET Updated Jul 27, 2017

Manufacturing jobs, once the backbone of middle class employment, have dwindled to the American economy’s detriment. It’s a fact bemoaned by citizens and politicians alike: jobs that once fueled the nation and its people are outsourced to cheaper laborers overseas or eliminated by advances in technology. If only there were a way to bring them back, they say.

Outsourcing contributed to a decline of nearly 6 million manufacturing jobs between since 1998, hurting the US manufacturing sector. Noble a goal as it may be to return these jobs to US shores, the jobs of the past are (mostly) not coming back. Instead, what the country needs are new jobs to power workers of generations old and new in a rapidly changing world.

Though presidential hopefuls from Trump to Sanders love to invoke it in debates, the notion that bringing back yesterday’s jobs is a panacea to America’s woes is vastly oversimplified. Moving forward is not about restoring the job market to the situation of twenty or thirty years ago. That world is gone and we need to move ahead, not backwards.

A convergence of factors have shaped the national and global economies over the decades, and it will require new jobs, not old ones, to build up a strong middle class.

A Changing US Manufacturing Sector

The primary reason manufacturing jobs have left the US is that as tariffs have been reduced and the world has become flatter, transportation and labor costs in other parts of the world have made those locations better suited to high capital and/or low technology manufacturing. Think auto manufacturing (high capital) or textile or toy manufacturing (relatively low technology). The jobs have been replaced in the US by high technology manufacturing jobs, and high and low end service industry jobs. Unfortunately, the good replacement jobs often require skillsets that those who have been displaced do not possess (think of a web designer) so they are relegated to the low end jobs (such as retail).

Secondly, the age of automation has arrived. The manufacturing plants of today need only hire a fraction of the workers they did a generation ago due to heavy automation. Since manufacturing is one of the first of industries to utilize robotics heavily, it is not going to provide the numbers of jobs that it did even a generation ago.

The third reason jobs are not coming back is the fact that some of them already have -- over 700,000 since 2010 -- and the results have been mixed. Many manufacturers have “onshored” or moved their factories back to America because it’s become less cost-effective to outsource work, especially as wages have risen in China, Mexico and other locations.

Onshoring, though, has not been the boon to employment for which American people may have hoped

Firstly, the jobs are not competitive enough or bountiful enough to power a new force of workers. Where the salary of a factory worker was more than satisfactory in the 1980s, average wages for employees in manufacturing positions are lower today when adjusted for inflation: $8.67 in 2015 compared with $8.80 in 1985. Such wages were once considered higher than average, but they are now 7.7 percent less than the median for all jobs.

Companies that are onshoring are also increasingly doing so in states where workers are less likely to join unions. When adjusted for inflation, non-unionized workers in automotive plants wages fell 14 percent between 2003 and 2013. That’s not to mention the hazards of factory work; if labor laws aren’t up to standard, workers’ safety could be on the line.

Even if more companies were to onshore, and labor, wage and union laws to be improved, the global economy has shifted too much for manufacturing to regain its powerhouse position. Corporations know this, and will continue to adapt at a fast pace to stay competitive. The American workforce needs to catch up to this adaption, and fast.

Simply put, manufacturing jobs in America can’t provide the same standard of living they once could. And if the goal is to grow and strengthen the US middle class, onshoring jobs lost and creating new manufacturing jobs can help, but it won’t produce the sheer number of middle class jobs that the country needs.

The Jobs of Today (and Tomorrow)

Clinging to the industrial economy of yesterday is counterproductive -- politicians that make promises to do so may be missing the foresight needed to take employment to the next level. Today’s economy is a knowledge economy, through which specialized skills and/or emotional intelligence, those least likely to be automated, are required to succeed.

For the middle class, as manufacturing jobs have dwindled they have been proportionately replaced by the rise of jobs in the service industry. Since manufacturing jobs are unlikely to gain the prominence they once had, strengthening the service-based economy would almost certainly do more for the middle class than solely relying on onshoring.

In the meantime, tens of millions remain unemployed, while 5 million jobs remain unfilled despite the population being better educated than ever. This phenomenon is what some analysts call the skills gap.

The problem is that the jobs hiring cannot be met by prospective workers; there is a deficit in some industries where there is a surplus in others. Rather than focusing on bringing back manufacturing, it would be helpful to improve training and education so that people entering the workforce can be matched with the jobs we need most.

Ironically, one of the industries that does still need workers is -- you guessed it -- US manufacturing. But the gap is not in entry-level positions -- factories needs skilled workers with mathematical and computer abilities. The abilities coveted for these jobs are true across the board: other careers seeking workers are in fields like mathematical and computer operations, engineering, coding, and IT.

If workers were better equipped with the skills necessary to work in an increasingly technological era, this could help fill the gap in software, computers, engineering and other STEM disciplines. These, after all, are driving innovation -- and potentially creating the very processes rendering old jobs obsolete. A displaced middle class worker does not have to go back to get a college degree either -- many of the core skills required could be learned in six month to one year training programs or even on the job, if the right support was put into place. For example, you can teach solar panel installation quickly, and solar jobs have grown over 20% per year recently.

Other unfilled jobs are the ones we will always need: teachers and doctors, restaurant workers, trade workers and more. Factors like low wages and poor benefits may be keeping some of these jobs from enthusiastic applicants, while industries like healthcare need more people than ever to serve an aging population. Better compensation and incentives for high-stress jobs in education and healthcare could help employment rise and the middle class grow.

Lastly, adaption is perhaps the most important virtue for all in materializing jobs geared toward an imminent tomorrow. Some industries that exist today could not even be dreamt of 20 years ago; we should expect even newer careers to crop up in the not-so-distant future. Jobs in renewable energy, robotics, Big Data and app development are ones to watch for; the rest will emerge organically in time. Adaptation on its own can be particularly tough on experienced workers that have lost their jobs in the manufacturing sector. Training programs with measurable goals are critical to make the transition to the today’s economy possible.

Ultimately, instead of jumping back to old fashioned assembly lines, the best way to prepare and strengthen the American workforce is to keep our eyes on the future. Manufacturing will always be an important part of the US economy, but looking backwards won’t yield progress. Americans deserve the tools to seize the opportunities of the new economy, instead of falling back on nostalgia and dreams of yesteryear.

Ed Sappin is the CEO of Sappin Global Strategies, a strategy and investment firm dedicated to the innovation economy. Follow him on Twitter @esappin.

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