US Manufacturing is alive and well?!?

I read an interesting article written by Knight Kiplinger in the 01/2008 edition of his personal finance journal. He not only boasts that our annual output is greater than any other country but that improving productivity is actually earning factory workers higher wages and benefits. He says we are selling record amounts of American goods overseas. The link to the full article is below. I would love to hear your comments regarding this article. Thank you.


One Response to US Manufacturing is alive and well?!?

  1. petemurphy says:

    This is a GREAT post, Brian, because this is a common argument used by “free trade cheerleaders” like Kiplinger. They hope that their readers will forget that America’s population has grown dramatically over the years.

    To say that our manufacturing output is at a record level is another way of saying that it is only slightly higher than it was decades ago. For example, since 1982 our population has grown by 30% or by 69 million people. But manufacturing has essentially been flat. So, among those 69 million people, not a single new manufacturing job has been added, due to the loss of manufacturing jobs to over-populated trading “partners.” In fact, as the article pointed out, manufacturing employment has actually fallen due to productivity gains. Were it not for the outsourcing of manufacturing jobs, manufacturing employment would have grown along with the population.

    Kiplinger also stated in the article that “Improving productivity enables factory workers to earn higher wages and benefits.” This is an out-right lie that has been used to placate employees’ fears about losing their jobs if they improve productivity. The fact is that there is absolutely no relationship between productivity and compensation. (See Figure 1-5 in my book, “Five Short Blasts.” Then look at Figure 1-6.) While it is true that improvements in productivity keep manufacturers competitive and improve profits, it is only the demand for labor that drives compensation higher.

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