By Steve Levy
Is Manufacturing the Key to Job Creation--A 2010 Op Ed by Andy GroveUploaded: Mar 28, 2016
Andy Grove, a pioneer in Silicon Valley, dies last week. The New York Times as part of a tribute reprinted an op ed he wrote in 2010 for Business Week.
From the article
"According to Mr. Grove, Silicon Valley was squandering its competitive edge in innovation by failing to propel strong job growth in the United States."
Much of the article warned against overemphasis on start ups versus large scaling up of job creation activities and got into issues of offshoring and the free market versus government policies. You need to read the article to get the full flavor.
The part that interested me was the emphasis on manufacturing. "And yet, an all-out commitment to American-based manufacturing has not been on the business agenda of Silicon Valley or the political agenda of the United States."
I do support an emphasis on job creation but do not think manufacturing jobs are the right target.
My initial perspective on the article is that manufacturing has acquired an auora/mystic that is popular but not helpful in designing policy to help people.
Let’s get a couple of facts out. One, manufacturing output in the U.S. is rising, not falling. Two, manufacturing job levels are declining virtually everywhere. Three, the reason for one and two is that manufacturing productivity gains outpace the rise in demand so companies can produce more with fewer workers.
With regard to Silicon Valley and the nation, Grove wrote at a time of great economic distress. Since then the peninsula, the heart of Silicon Valley had added jobs at twice the national rate and seen the unemployment rate fall to 3.9% from 9.6%. Between 2010 and 2015 the peninsula added about 10,000 manufacturing jobs (recovering about half the recession losses) while adding more than 50,000 in the Information sector and more than 130,000 in Professional and Business Services.
I think manufacturing has an auora that far outweighs what is important and possible. Any manufacturing job revival in the U.S. would be in new niche markets (therefore small for job creation) and require a set of skills akin to or close to the high tech world.
Moreover, as the present presidential campaign shows, the rhetoric is of blame, forgetting that most job losses are from productivity/automation, forgets the gains to consumers from cheaper prices (do you really want Apple to compete against Samsung by producing IPhones in the U.S.) and, finally, is everyone ready for a major trade war?
The “job centric” theme and building an economy with middle wage job opportunities IS important and if that is what folks take away from the Grove article, bravo!!
It is not just total job growth that is important, it is also jobs that pay good wages and do not require a four year degree but do require different kinds of post-secondary school training. Here are three ideas that work toward both goals:
1) Build lots of stuff. Of course the projects should pencil out but policies that support housing and infrastructure would help aggregate employment and GDP and help the middle class. And there are lots of opportunities from housing to retrofitting buildings to many forms of transportation, energy and water investment
2) Have fiscal policy focused on productive investments in people, infrastructure and capital is correct in my opinion.
3) If you really wanted to help job creation and upward mobility without spending a dime (well maybe a nickel or two) bring unauthorized immigrants into the mainstream—free to learn and earn. Many have skills that are underutilized and many more have potential. This is, of course controversial as the presidential campaign shows. But in practical terms this would do more to increase upward mobility, especially at a time when experienced baby boomers are retiring in greater and greater numbers, than any policy focused on increasing manufacturing job growth at a time when manufacturing job levels are falling around the world in response to productivity growth.
But if the third idea is not your political favorite go with the first two for a job centric policy focus in our American economic system.
Please respond regarding Grove's emphasis on manufacturing and ideas about a "job centric" policy.