The Ups and Downs of Making Stuff

During his so-called Twitter town hall today, President Barack Obama touted the need to create not only more high-tech jobs, but more manufacturing jobs as well.

“Well, it’s not an either/or question; it’s a both/and question,” the president said. “We have to be successful at the cutting-edge industries of the future like Twitter. But we also have always been a country that makes stuff. And manufacturing jobs end up having both higher wages typically, and they also have bigger multiplier effects. So one manufacturing job can support a range of other jobs—suppliers and the restaurant near the plant and so forth. So they end up having a substantial impact on the overall economy.”

While the president’s statement is basically true, he left out an important caveat: Yes, America has always made stuff; in fact, we run neck-and-neck with China as the world leader in making stuff. We also make more stuff (in inflation-adjusted dollar terms) than we ever did before. The rub is that, thanks to a surge in productivity, we churn out all of these products with far fewer hands than we used to. In 1979, at the sector’s employment peak, more than 19 million people in the U.S. were engaged in manufacturing; today, fewer than 12 million are.

[EXPAND More]It is a paradox that Peter Drucker understood well. “Manufacturing is following exactly the same path that farming trod earlier,” Drucker wrote in Managing in the Next Society, adding that, on a political level, “it is simply incomprehensible that manufacturing production can go up while manufacturing jobs go down.”

“Most people continue to believe that when manufacturing jobs decline, the country’s manufacturing base is threatened and has to be protected,” Drucker asserted. “They have great difficulty in accepting that, for the first time in history, society and economy are no longer dominated by manual work, and a country can feed, house and clothe itself with only a small minority of its population engaged in such work.”

What do you think: Can America really create a meaningful number of new manufacturing jobs at this point? Or is it time to accept reality and move on to a post-industrial age?[/EXPAND]