March 14, 2017

MASSIVE PRODUCTIVITY INCREASES DRIVE THE DEFLATIONARY EPOCH:

It won't be easy to bring back millions of manufacturing jobs (Brookings Institution, Nov. 18th, 2016)

[T]he total inflation-adjusted output of the U.S. manufacturing sector is now higher than it has ever been. That's true even as the sector's employment is growing only slowly, and remains near the lowest it's been. These diverging lines--which reflect the sector's improved productivity--highlight a huge problem with Trump's promises to help workers by reshoring millions of manufacturing jobs. America is already producing a lot. And in any event, the return of more manufacturing won't bring back many jobs because the labor is increasingly being done by robots.

Boston Consulting Group reports that it costs barely $8 an hour to use a robot for spot welding in the auto industry, compared to $25 for a worker--and the gap is only going to widen. More generally, the "job intensity" of America's manufacturing industries--and especially its best-paying advanced ones--is only going to decline. In 1980 it took 25 jobs to generate $1 million in manufacturing output in the U.S. Today it takes five jobs.

Posted by at March 14, 2017 5:46 AM

  

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