April 17, 2017

"Why Don’t All Jobs Matter?"

Paul Krugman asks, musing on Trump's stress on bringing back coal mining and manufacturing jobs.
In an ever-changing economy, jobs are always being lost: 75,000 Americans are fired or laid off every working day. And sometimes whole sectors go away as tastes or technology change....

While we can’t stop job losses from happening, however, we can limit the human damage when they do happen. We can guarantee health care and adequate retirement income for all....

I don’t want to sound unsympathetic to miners and industrial workers. Yes, their jobs matter. But all jobs matter.
Is there something different about coal mining and manufacturing jobs? Is it just politically useful (because conservatives can blame liberals and foreigners for the job losses? because these are jobs for, mostly, white men?)?

I'm a little surprised to see Krugman adopting the rhetorical format so recently seen in the much criticized "all lives matter" response to "black lives matter." Trump is essentially saying "mining and manufacturing jobs matter," and Krugman is responding "all jobs matter." The first speaker says there's a special problem here, and the second speaker — with the "all Xs matter" response — cancels out all the work of the first speaker. I'm not saying the second speaker is always wrong, just that the "black lives matter"/"all lives matter" sequence is so freshly critiqued that I'd choose different words if I wanted to enlarge the frame around a problem that someone else has taken pains to identify and get other people to care about.

By the way, I remember when Obama wanted to pay special attention to jobs that "fit with how [men] define themselves as men."
[F]rom Ron Suskind's new book "Confidence Men: Wall Street, Washington, and the Education of a President" (pp. 18-19)(boldface added):
“Look, these are guys,” [Obama] said. “A lot of them see health care, being nurse’s aides, as women’s work. They need to do something that fits with how they define themselves as men.” ...

As the room chewed over the non-PC phrase “women’s work,” trying to square the senator’s point with their analytical models, [Alan] Krueger — who was chief economist at the Department of Labor in the mid-1990s at the tender age of thirty-four — sat there silently, thinking that in all his years of studying men and muscle, he had never used that term. But Obama was right. Krueger wondered how his latest research on happiness and well-being might take into account what Obama had put his finger on: that work is identity, that men like to build, to have something to show for their sweat and toil.

88 comments:

rcocean said...

I find Krugman boring. He's ALWAYS pushing globalization. So, he doesn't think *American* jobs matter. And he's upset at Trump saying they do. So, he comes back with the lame "What about everyone else's job?"

Its so predictable. A verbal technique that tries to subvert, but doesn't really address the issue at hand.

Coal mining and manufacturing "Matter" because they are high paying jobs for people who don't go to college, and because they are job multipliers for places that have mfg. plants and mines. They also help our trade balance, since presumably, making a widget here, means we don't have to buy a foreign widget. In fact, we may sell our widget to foreigners.

You know who doesn't have a lot mfg and coal mines? Manhattan, Beverly hills, DC, Miami Beach, Boston, etc. You know, the kinda of places where Krugman's audience lives.

Ron Winkleheimer said...

All jobs do matter, but coal mining and manufacturing are (or were) pretty well paying jobs with good benefits that people who are not among the cognitive elite could perform and earn a decent living that could be used to support a family.

A lot of the jobs that were supposed to replace them cannot be performed by just anybody provided that they are given "training." Programming computers is a skill that relatively few people can do well, even among very intelligent people. And they are outsourcing those jobs as much as possible.

I know people who have gotten jobs as pharmacists and nurses, and physical therapists, but those jobs require extensive education. They pay well, but once again, a limited number of people are going to be able to be able to qualify for them.

So, what does Krugman expect people who can't make it in the "information economy" to do? Especially since he seems to be great with importing people to do jobs at a cheaper rate, thus suppressing wages for the jobs people can get.

lgv said...

Correct me if I'm wrong, but Krugman had no problem with bailing out GM and their manufacturing jobs.

Here's why Krugman is both wrong and right. His point is that "all jobs matter". He is right. All jobs matter. The issue that Trump is addressing is that we have not treated the jobs issue as "all jobs matter", rather that mining jobs don't matter at all. By addressing industries we have been totally ignored (those that don't require the college degree that every liberal thinks everyone should have), Trump is now making "all jobs matter", not just non-mining and non-manufacturing jobs.

Yes, it is the same argument as the "....lives matter" issue (almost called it a debate). The difference is that the assumption that we have not elevated the importance of black lives to those of other races is not supported by the facts.

J. Farmer said...

@Ron Winkleheimer:

So, what does Krugman expect people who can't make it in the "information economy" to do?

More transfer payments. That's usually what people in Krugman's globalist position take. They know that there will be "losers" in the globalized economy, and we should help them, usually by mailing them a check. What a lot of people who think that way don't realize is that a job is not just a source of a paycheck to pay your bills. For a lot of people, their work gives them a certain sort of pride. Self-esteem, after all, is a byproduct of achievement. You're not going to get that sitting at home and waiting for the check to arrive in the mail.

sean said...

Also, coal mining and manufacturing do not involve personal servility. Working for a lawn maintenance company servicing some tech guru's estate in Atherton--which is what people like Krugman thinks the yahoo males should be doing--is personally degrading. You might as well say that being a butler is man's work (man's work maybe, but not freeman's work).

Rick said...

Is it just politically useful (because conservatives can blame liberals and foreigners for the job losses? because these are jobs for, mostly, white men?)?

The left has been highlighting the loss of manufacturing jobs for two decades because it's politically useful to demonize business (corparashuns!) and create FUD. But sure Trump discovered it last week because he's only interested in jobs losses by whites he can blame on foreigners.

rehajm said...

Krugman will get whatever pass he needs on the virtue stuff. He's the only go to for lefties when they need justification for terrible economic policy. Stiglitz doesn't really have his heart in it anymore.

dreams said...

It's disingenuous to advance an argument that Trump is only interested in coal and manufacturing jobs (fake news) but those are the jobs hardest hit to use the women and children analogy. Trump has talked about growing the economy at a 3 to 4% rate and if that happens then all kind of jobs will be created.

Ambrose said...

A lot of people think that coal mining jobs did not die out on their own due to market forces - the industry was unfairly done in by over-regulation, coupled with generous subsidies to competing energy sources, by a government obsessed with climate change. (Now of course fracking played a role, but there is some truth to this).

Chuck said...

That may have been the first Paul Krugman column that I have ever read, that didn't make me gag before reaching the end.

I don't mind the "All jobs matter" language. Probably because I am someone who got sick of "Black lives matter," and all of the various permutations and counter-usages within the first couple of weeks that the line was introduced in American popular culture.

Here is the one thing (only one thing) that former Enron advisor Paul Krugman didn't get this time. With Sears, and Firestone tires, and Carrier HVAC equipment, etc., we don't have any politicians saying, "With your help at the ballot box, our party promises to put them out of business..."

And that is what we've seen with coal, and some sectors of the oil industry. Fracking, too. None of those industries exist in any sort of political vaccum. There are political movements whose intent is to put them out of business. I'm lloking at you, Sierra Club; and you, Greenpeace; and you, Natural Resources Defense Council. So naturally, every political action has a reaction.

Now, of course there is another response and Krugman alluded to it; it isn't just politics that is putting coal out of business. There's natural gas and the need for modernized electricity production at lower cost. And yeah; slowed demand and alternative production, blah blah blah.

Anyway, if I had read the Krugman column on my own, without Althouse prompting, I'd have never thought of the "All jobs matter/Black lives matter" comparison.

Jim at said...

Krugman. The guy who said the creation of the Internet would have the same impact as the fax machine.

Yeah. I look to him for advice whenever I can.

readering said...

I think part of the appeal is to encourage high paying jobs and union jobs (the two going together). Coal mining fits the bill.

EDH said...

Yes, their jobs matter. But all jobs matter. Is there something different about coal mining and manufacturing jobs?

Coal is a sector that the previous administration's policies intentionally targeted for destruction.

To continue the "Black Lives Matter" analogy, Trump is simply reorganizing a "police department" (EPA) that was infected with a systemic discriminatory intent.

Ken B said...

I think you miss the entire point of saying "Black lives matter." There are two reasons to aggressively assert what no-one denies: to imply the target of your aggression *does* deny it, and to use peer pressure to extort explicit agreement. This is a way to enforce piety. And that is why saying, in response, "all lives matter" enrages activists: not because it denies that Black lives do indeed matter, but because it rejects the attempt at control.

Mark said...

all jobs matter

Some jobs are more important than others. Some jobs, like mining and manufacture go toward the creation of tangible wealth. Other jobs just move wealth around, but without adding to it. Still other jobs destroy wealth.

Most of what Krugman does or calls for falls into this latter category.

In any event, whoring at the New York Times -- those jobs do not matter at all.

The Vault Dweller said...

I actually like Krugman's comparison to Black lives matter/all lives matter debate. Because I think in the coal miner's situation and the black lives matter situation both groups will have the same structure to their arguments.

For what it is worth I think the coal miner's position is probably factually better, because there are regulations and burdens aimed specifically at the coal industry. Also for the last several decades it has been acceptable to specifically target the coal industry and bad and evil by various mainstream groups. Conversely it has been a couple generations since there have been regulations and burdens aimed specifically at black people in America, also it has been probably a longer time since it has been publicly acceptable to label Black Americans as bad or evil.

David Begley said...

Smart comment by rcocean. Lots of good comments.

roesch/voltaire said...

.I have been in deep hole coal mines and unless you like doing the blasting the job is not well liked but done for necessity. I think any number of men would be willing to do other work if training and help were available. Roughly 1.6 million IT workers are needed for example,okay if you want more "manly" work there are hundred of utility pole climbing positions available, and there are shortages in the construction industry etc so to privilege coal mining jobs ignores the whole job market picture to make its point at the expense of what is needed.

Lewis Wetzel said...

Krueger is a joke. He is a "labor economist," meaning a political hack. Krueger wrote a famous paper stating that increasing the minimum wage did not decrease jobs, wages, increase prices or lower corporate profits. You can read the paper here:
http://davidcard.berkeley.edu/papers/njmin-aer.pdf

Krueger should be known for this comment at the end of the paper:
Taken as a whole, these findings are difficult to explain with the standard competitive model or with models in which employers face supply constraints (e.g., monopsony or equilibrium search models).

Job markets are described using monopsony and equilibrium search models.

Sebastian said...

"it has been a couple generations since there have been regulations and burdens aimed specifically at black people in America" There are such regulations, but they favor blacks.

Lewis Wetzel said...

rcocean wrote: "I find Krugman boring. He's ALWAYS pushing globalization."
I disagree. Krugman is for globalization when he sees it as promoting a liberal agenda. He wasn't a fan of the EU, and is less-than-hysterical on Brexit. IIRC, his "Nobel" winning research was about why it sometimes makes economic sense to source manufactured goods locally rather than from the global market.

Sebastian said...

"Krueger wondered how his latest research on happiness and well-being might take into account what Obama had put his finger on: that work is identity, that men like to build, to have something to show for their sweat and toil." Telling, isn't it, that among economists this might count as a discovery. Give that man a Nobel Memorial Prize (only Memorial, mind you), to go along with his equally deserved Peace Prize.

Static Ping said...

I remember a quote years ago about the UK economy, that went roughly like "it is not possible to build an economy where everyone works washing each others' laundry." Service jobs are nice, but there needs to be wealth creation jobs to support them. Wealth creation is traditionally either resource extraction (farming, mining, etc.) and especially manufacturing (use the resources to make a more valuable end product). The digital revolution has allowed wealth creation through information, but still those wealth creating jobs are where the wealth comes from to make that information valuable. All jobs matter but some jobs matter more than others.

Achilles said...

Former Enron adviser Paul Krugman has always been a globalist tool always pushing a globalist narrative writing in a paper owned by Oligarchs.

Nobody on the left even cites him for anything anymore. He is a literary fop bought and paid for.

Martin said...

Krugman will feel differently if the NYT loses interest in him and outsources his column to some AI computer in Singapore.

Tom said...

A manufacturing base is the basis of wealth. Without a viable produce to sell to others, our service jobs are not sustainable. We've ridden the way of the industrial revolution to this point - but without new manufacturing, I'm not sure how we continue this trend.

Dust Bunny Queen said...

Is there something different about coal mining and manufacturing jobs?

Yes. Those types of jobs that produce materials, parts, components are the basis for many other jobs and drive the economy in many different areas. Those types of jobs and industries are extremely interconnected and intertwined in the economy.

Unlike a job as a waitress or retail clerk....not that there is anything wrong with those jobs....a miner, for example, produces a commodity that is used in multitudes of other businesses and creates other jobs that depend on the commodity. That commodity has to be transported (jobs) by machinery (manufacturing jobs). Infrastructure is necessary to transport the commodity (more jobs building and maintaining roads and railroads). The equipment and gear the miner needs creates more jobs and need for other commodities.

Once the miner is paid, every bit of the money he spends also boost the economy and helps keep the waitress and retail clerk in their jobs so that they also have money to spend. The money turns and turns and the economy grows.

The velocity of money is accelerated by mining and manufacturing jobs. Agriculture is also one of the key components.

The importance of these key engines of the economy cannot be understated.

readering said...

The decline in manufacturing jobs follows the decline in agricultural jobs insofar as machines replace muscles, including brain muscles. The real problem will come when machines replace muscles in service jobs.

Sebastian said...

"without new manufacturing, I'm not sure how we continue this trend." Robert Gordon says we can't. The Rise and Fall of American Growth is a powerful and sobering book.

Lewis Wetzel said...

The reason the Krueger-Card paper, http://davidcard.berkeley.edu/papers/njmin-aer.pdf, doesn't make sense is because their methodology was bad. They studied the effect of increases in the minimum wage on the fast-food industry, but they only looked at large corporations, not mom-and-pops. Large corporations have more places they can "hide" the effects of minimum wage increases: they can exert downward pressure on back office jobs and wages, or squeeze their suppliers. This is elementary.
But instead of looking for the source of the anomaly, Krueger and Card stopped at the point where the flaw in their methodology would have become clear. They had the answer they wanted -- raising minimum wage did not impact minimum wage jobs.

readering said...

In 1870, almost 50 percent of the US population was employed in agriculture. As of 2008, less than 2 percent of the population was directly employed in agriculture. At current rates of decline manufacturing will be at that point within ten years.

Michelle Dulak Thomson said...

Odd, Ann, that you left out Krugman's defense of his own job -- newspaper writing.

FullMoon said...
This comment has been removed by the author.
Michelle Dulak Thomson said...

And I found his defense of Sears strange as well. Sears has been a slowly dying, hopeless dinosaur for decades. There are retail outlets that have died that I liked (Mervyn's was one; the entire offline sheet music industry, which I worked half my life in, was another), but not Sears.

John said...

why do manufacturing jobs matter? At least why do they matter any more than any other job?

To take up where Readering left off, why shoudl they matter any more than agricultural jobs?

Both have declined dramatically as a fraction of the total labor force. Manufacturing's share peaked in 1943 and has been pretty straight downward trend since 1946 http://mungowitzend.blogspot.com/2016/04/hey-trump-and-sanders-manufacturings.html

Yet we have, even adjusted for population growth, more agriculture and manufacturing in the US than ever before. Mfg was something like $1,200 per capita in 1970 and $6,500 per capita in 2014. (Inflation adjusted dollars)

Think coal mining jobs are "good" jobs? Ever think about applying for one? I rest my case. They are nasty, dangerous, physically hard and don't pay all that well unless you have some skills. Just look at the economy of the Appalachians and other coal areas. The unskilled coal miner is not getting rich.

Ditto the unskilled manufacturing jobs that most people have in mind when they talk about manufacturing jobs. Unless you are lucky enough to have a job in a concentrated, unionized, industry like autos, steel or a few others, they don't pay all that well. From a physical standpoint, most manufacturing jobs involve doing the same thing over and over again, hundreds or thousands of times a day for not a lot more than minimum wage.

Yes, if you have skills, you can do very well in manufacturing. $60-80,000 yr or more.

If you don't have skills, you may do better working at Walmart. Less risk, less physically demanding and not much less money.

Manufacturing matters.

US manufacturing matters particularly to us in the US. (And British manufacturing to Brits, Chinese mfg to Chinese and so on)

But manufacturing jobs? They matter too but no more or less than any other job.

John Henry

John said...


Blogger Sebastian said...

"without new manufacturing, I'm not sure how we continue this trend." Robert Gordon says we can't. The Rise and Fall of American Growth is a powerful and sobering book.

Is he saying "without new manufacturing" or without new manufacturing jobs?

Two completely different things, not even that closely related. US manufacturing has been on the rise for a long. US manufacturing jobs on the fall for more or less as long.

John Henry

William said...

When Thatcher shut down some mines because they were uneconomical, there were quite a few howls from the left. It's ok to close a mine because it's not environmentally sound, but when you shut down a mine for economic reasons, then you have to consider the human dimension of the workers involved. If some of this sounds confusing or contradictory, always remember that the left owns the moral high ground and that you are wrong. Maybe some day market forces will make solar or wind power more economical than coal, but until such time it's important to subsidize wind and solar and bankrupt coal because that's the moral thing to do. I think we can all agree that Paul Krugman is not only smarter than market forces but exists on a plane of higher moral authority.

Gahrie said...

Probably one of the first things one should do is reduce the amount of competition American workers face by halting illegal immigration, regulating legal immigration and encouraging the self deportation of foreign workers here illegally.

John said...

"Contrast the year 1908 with the year 1911. The factory space increased from
2.65 to 32 acres. The average number of employees from 1,908 to 4,110, and the cars
built from a little over six thousand to nearly thirty-fi ve thousand. You will note that men were not employed in proportion to the output.

We were, almost overnight it seems, in great production. How did all this come
about?

Simply through the application of an inevitable principle. By the application of
intelligently directed power and machinery. In a little dark shop on a side street an old man had laboured for years making axe handles. Out of seasoned hickory he fashioned them, with the help of a draw shave, a chisel, and a supply of sandpaper. Carefullywas each handle weighed and balanced. No two of them were alike. The curve must exactly fit the hand and must conform to the grain of the wood. From dawn until dark the old man laboured. His average product was eight handles a week, for which he
received a dollar and a half each. And often some of these were unsaleable – because
the balance was not true.

To-day you can buy a better axe handle, made by machinery, for a few cents.
And you need not worry about the balance. They are all alike – and every one is
perfect. Modern methods applied in a big way have not only brought the cost of axe
handles down to a fraction of their former cost – but they have immensely improved
the product."

Henry Ford, 1923 "My Life and Work" (Available on Gutenberg)

This is the single best book on manufacturing of the hundreds I have read over the past 40 years. Toyota agrees. The famed Toyota Production System that everyone is impressed with came directly from this book. Ford was practicing TPS when Toyota was still making textile machinery.

Toyota's Taichi Ohno, credited with the TPS, is the first to say that he just copied and adopted Ford. The book was out of print in English for 50 years. It was never out of print in Japanese translation.

John Henry

Gahrie said...

If you don't have skills, you may do better working at Walmart. Less risk, less physically demanding and not much less money.

Yes, but much less satisfying or self - defining...which is sort of the point. Many men won't be happy working at Wal-Mart. They want to be actually DOING something.

It's the same problem our boys are facing in school......

But what the Hell..they're only splooge stooges with wallets.

Comanche Voter said...

Oh there were regulations targeting the black community. They were called Jim Crow laws.
There are regulations and regulators targeting the coal mining industry. They come from the EPA. Hard to tell the difference between the two sets of regulations--their intent was the same--to extinguish or suppress the community.

William said...

Remember John L. Lewis and The Road to Wigan Pier. The coal miners used to be the shock troops of the revolution and the darlings of the left. All that's past. Don't expect any films like How Green Was My Valley to memorialize their struggles ever again. When the revolution comes, it will not be led by coal miners. Fuck them. A bunch of red neck assholes who are too stupid to find a better job. There are people in America more deserving of its largesse and, more importantly, better prepared to lead the revolution.

tim maguire said...

Krugman wants to give a man a fish, Trump wants to teach a man to fish. Krugman thinks he's morally superior, but he's wrong.

Lewis Wetzel said...

You're onto something with your 5:57, John Henry.
To be more prosperous, you need to increase the efficiency of labor. You need axe handles made by machines by the ten thousand, not made by a human craftsman as piece work. Adam Smith knew this.
American GDP is about twice what it was in 1989 (in constant dollars). Why do people feel that there is less upward mobility now than in 1989? I think that this matters in the US. It is of critical importance if we want to remain a republic.

John said...


Blogger Gahrie said...

Yes, but much less satisfying or self - defining...which is sort of the point. Many men won't be happy working at Wal-Mart. They want to be actually DOING something.

Really? What is satisfying or self defining about most manufacturing jobs? My mother in law worked 35 years in a GE plant assembling circuit breakers. A breaker shell would come down a conveyor, she would reach into a bin, pick up a small metal stamping and put it in the shell and it would move to the next operator who would put another piece. Then, 2 seconds, later she would do it all over again. About 12,000 times a day.

For 35 years.

She handled about 100mm circuit breakers over her career.

She used to go on and on to me about how rewarding and self-defining it was. (Not really).

It was a union job and paid a bit more than min wage but not a lot.

Most importantly, it was a job. It allowed her and my father-in-law, who worked there as a schlepper, to raise 6 kids and put food on the table every day. She was certainly grateful and glad to have the job.

Self-actualized and spiritually fulfilled? Not so much.

John Henry

buwaya said...

"was something like $1,200 per capita in 1970 and $6,500 per capita in 2014"

I have a problem with such models. Much of this is loading "value" of work that is not actual production into output. One I know very well is cost of administration and other office work, generally due to regulatory overhead, lumped into "manufacturing". That $6500 per capita most certainly is much less about making more or better of anything than all the ancillary stuff loaded on it.

I have examples of industrial processes I know very well, where in the 1990's say the headcount for a given volume of work was about 66/33 hands on doing the job/back office vs today, where it is more like 33/66, and is more costly to do in constant $ than in the 1990's. It also shows that macroeconomic productivity calculations can entirely miss the point.

buwaya said...

"Self-actualized and spiritually fulfilled? Not so much. "

The problem with self-actualization and spiritual fulfillment is that the vast majority of people when absolved from duty to support themselves or their children do not actually self-actualize or find spiritual fulfillment. The general tendency is to become unhappy, troublesome and annoying to everyone else.

AReasonableMan said...

John said...
To-day you can buy a better axe handle, made by machinery, for a few cents.


CNC routers. Same with guitars. Today a $300 solid body guitar is vastly more precisely made than a premier guitar from back in the 60s. I own both and prefer the cheap modern ones.

CNC routers and CNC mills are miracles. They make small manufacturing operations very competitive if the manufacturer knows what he is doing. Labor costs for the actual manufacturing steps fall dramatically and most of the time is invested in other tasks where they can more directly compete with low cost foreign suppliers. Unfortunately, the US has largely missed the boat in making these machines, Japan, Germany and more recently China are the market leaders. I find this inexplicable. If Trump was genuinely concerned about US manufacturing jobs he would make it a priority to make the US a leader in computer aided manufacturing.

buwaya said...

"If Trump was genuinely concerned about US manufacturing jobs he would make it a priority to make the US a leader in computer aided manufacturing."

This is most definitely true. The US was a leader in much of this at one time. Machine tools are a "high tech" high precision, highly skilled industry.

Matthew Sablan said...

"So, what does Krugman expect people who can't make it in the "information economy" to do?"

-- That's what the Guaranteed Basic Income or Whatever It Is Called is for, duh.

Fernandinande said...

Krueger wondered how his latest research on happiness and well-being might take into account what Obama had put his finger on

I'm pretty sure a different Dear Leader put his finger on that extremely simple concept.

buwaya said...

"That's what the Guaranteed Basic Income or Whatever It Is Called is for, duh."

Once we are started down that road, much of humanity will be the pets and wards of the rest. And more and more of it will be pets and wards as time goes on.
Humans make very bad pets.

John said...

Blogger buwaya said...

I have a problem with such models. Much of this is loading "value" of work that is not actual production into output. One I know very well is cost of administration and other office work, generally due to regulatory overhead, lumped into "manufacturing". That $6500 per capita most certainly is much less about making more or better of anything than all the ancillary stuff loaded on it.

Why do you not count the administrative, maintenance and other overhead costs into manufacturing? It seems to me that everything that goes on in a manufacturing plant is a manufacturing cost and needs to be included in the cost of the product.

Some of it may be unnecessary and due to inefficiencies. Some of it may be externally imposed such as the myriad of regulations that need to be complied with. They are all "manufacturing" costs, though. If you don't spend that money, nothing gets manufactured.


I have examples of industrial processes I know very well, where in the 1990's say the headcount for a given volume of work was about 66/33 hands on doing the job/back office vs today, where it is more like 33/66, and is more costly to do in constant $ than in the 1990's. It also shows that macroeconomic productivity calculations can entirely miss the point.

I don't understand what you mean by more expensive today than in the 90's (even in constant dollars). There may be more of it, due to regulation and perhaps due to Parkinson's Law. I would expect that the cost per unit of work is less today than in the 90s.

As far as the proportion: It sounds a bit high to me but not unrealistically so. I would attribute that to the fact that manufacturing operations are easier to automate than the backroom.

Computers may make the manager's job easier and more efficient but you still need a manager for each line even though the number of actual operators will have been cut dramatically.

John Henry

Left Bank of the Charles said...

If it were important to saving the planet, we should pay the coal miners to stop mining coal. With 80,000 coal miners, $1 million each would cost $80 billion, about the cost of The Wall. If we paid off the coal electric plant and transportation workers too, that would be another $95 billion, around the cost of the California Super Train.

buwaya said...

"They are all "manufacturing" costs, though. If you don't spend that money, nothing gets manufactured."

Yes, but you are not getting more product or even a better product out of this. You are getting a false indication of output. If you, for instance (and strictly for example), make a certain category of pressure-rated steel pipe, you are almost certainly having to sell it for more today than in the 1990's because of the admin/regulatory/legal overhead, and you probably aren't making more or better (higher quality) pipe. You are making more costly pipe that is allegedly (or rather, more elaborately documented to be) safer, but its not really a more valuable product. You are creating more "value" in manufacturing, but it isn't really a value. What we have here is a case of piling on inefficiencies and claiming them as increased output.

"I would attribute that to the fact that manufacturing operations are easier to automate than the backroom. "

Not so. The backroom in general is more easily simplified over the period in question, a great deal has been done in say standardized internal accounting systems and inventory management and purchasing, etc. ; the real problem is that the functions required of the back room have become far more complex.

John said...

Amen to CNC machines. It is amazing what they can do and they can do it repetitively time after time in a way that no human ever could. That accuracy and precision is a large part of what makes them so valuable.

Another part is that they can make complex geometries that could never be made otherwise.

The US still has a lot of machine tool industry. Just up the road in Fond du Lac is one of the biggest in its sector, Giddings and Lewis. Plenty of others as well. Visit the IMTS show in Chicago next year for a real eye opener. Lots and lots of US companies there. Lots of other companies that have US manufacturing plants.

The jobs building those kinds of machines are highly skilled and pay very well.

Want to know why we don't do more of this? Can't find the people.

I had a conversation about this with a manager from Giddings and Lewis last year. They would like to expand but their biggest single problem is finding workers. Not even skilled workers but trainable workers. One issue is drug testing. 80% of all applicants fail the drug test.

I have a friend who builds automated packaging machinery. He has about 30 technical people (welders, machinists, mechanics, programmers etc). An unskilled person with some basic mechanical aptitude starts at $40m plus a good benefit package. His skilled people make $60-80m. He could expand his business by a lot if he could find people. He has had about 10 slots open for the dozen years I've known him. This is in the Chicago area.

He's not alone. Everybody I talk to, and I talk to a lot of people all over the country, tells me the same thing. If all they need is a warm body who can do fuck all for minimum wage, no problem. Someone who is actually useful? Very thin on the ground.

THAT'S the biggest problem that US manufacturing of CNC and other machinery faces.

John Henry

cubanbob said...

CNC routers and CNC mills are miracles. They make small manufacturing operations very competitive if the manufacturer knows what he is doing. Labor costs for the actual manufacturing steps fall dramatically and most of the time is invested in other tasks where they can more directly compete with low cost foreign suppliers. Unfortunately, the US has largely missed the boat in making these machines, Japan, Germany and more recently China are the market leaders. I find this inexplicable. If Trump was genuinely concerned about US manufacturing jobs he would make it a priority to make the US a leader in computer aided manufacturing."

Apparently this only became a problem on January the 20th.

Coal miners are useful to the economy. Much more than NGO employees. We need to address the misallocation of capital to NGO's via the tax code and income redistribution. Then there are the truly economically useless, the house organ propagandists of the DNC as exemplified by Krugman.

cubanbob said...

John you hit the nail on the head. Thanks in part to Griggs vs Duke Power we as a society have so fetishsized college education the great paying jobs straight out of high school are no longer considered good enough nevermind that they can pay more than jobs requiring college degrees. Notice that Germany doesn't have this particular problem.

AReasonableMan said...

cubanbob said...
Apparently this only became a problem on January the 20th.


No, but Obama didn't explicitly say that he was going to restore US manufacturing greatness. He should have, but he didn't, unlike Trump.

Hagar said...

The jobs that matter are those you are willing to pay someone to do as opposed to those that "they" make you pay someone to do.

buwaya said...

"If it were important to saving the planet, we should pay the coal miners to stop mining coal"

Its not the miners alone. The cost of "saving the planet" is in the entire sum of the policy implicated with coal. It is not one limited thing, it is an enormous, all-consuming thing, and it hits everyone, not just coal miners. Coal miners are simply canaries in the, well, coal mine.

You have to replace coal with something else, probably much more expensive.

To give an example, only about electricity - the environmentalists policy is to increase US electricity costs to @25cents per kw/h (this is the explicit plan; and this from @10 cents average at the moment) by banning coal, natural gas, nuclear and hydro generation. This will increase the annual electricity cost to consumers from $400 Billion to $1 Trillion, given the same consumption, though of course consumption will fall - and costs have been driving consumption down already, as in many States the average is up to 14-17cents per kw/h. All for no benefit to the consumers.

John Henry - this too is a place where "manufacturing" stats go wrong. Electric generation is in "manufacturing". Stuff is being made, more expensively, and raises costs, which are captured as higher output.

buwaya said...

"Visit the IMTS show in Chicago next year for a real eye opener."

I used to go to LA's Westec annually. I was in the business.

Lewis Wetzel said...

Hawaii Electric Light Company (Island of Hawaii)
Rate Schedule 2015 Average Cents/kWh
"R" Residential 34.65

https://www.hawaiianelectric.com/my-account/rates-and-regulations/average-price-of-electricity

The high cost of power is a significant drag on the economy here. Just about anything you can do is cheaper to do elsewhere, so the economy depends on tourism, boutique ag, and the Mauna Kea observatories.

John said...

Blogger cubanbob said...

John you hit the nail on the head. Thanks in part to Griggs vs Duke Power we as a society have so fetishsized college education the great paying jobs straight out of high school are no longer considered good enough nevermind that they can pay more than jobs requiring college degrees. Notice that Germany doesn't have this particular problem.

I agree with all this but don't understand what Griggs has to do with it? Griggs was a black man in an unskilled job who was fired because he did not have a high school diploma.

It is a big AA case because it opened the problem of disparate impact (blacks are more likely not to have a HS diploma) on top of disparate treatment (A black not hired because of race)

Maybe you are thinking of something else?

John Henry

AReasonableMan said...

Lewis Wetzel said...
The high cost of power is a significant drag on the economy here.


The location is a much bigger one. Hard to make a case to make anything other than surfboards in Hawaii and even surfboards are made by CNC these days.

buwaya puti said...

Griggs is often cited as a reason employers have stopped giving aptitude tests vs requiring credentials. I don't know if that's the whole story.

buwaya puti said...

Hawaii is a very expensive place to do business in most ways, which explains low personal incomes. Some of the poorest Asians in the US are in Hawaii.

cubanbob said...

AReasonableMan said...
cubanbob said...
Apparently this only became a problem on January the 20th.

No, but Obama didn't explicitly say that he was going to restore US manufacturing greatness. He should have, but he didn't, unlike Trump."

All you have pointed out is how clueless Obama and the Democrats were. And are. At least Trump has a clue. It's a start in the right direction.

John said...

Blogger buwaya said...

John Henry - this too is a place where "manufacturing" stats go wrong. Electric generation is in "manufacturing". Stuff is being made, more expensively, and raises costs, which are captured as higher output.


I take your point about the problem of aggregate manufacturing stats like dollar value. To call it an imprecise measure insults imprecise.

OTOH, we do need to measure and what other metric is there that is not far worse? Units? Tons? Physical volume? Persons employed? Raw material inputs? How do we aggregate the steel pipe, machine tools, frozen food and men's socks manufacturing?

Did manufacturing per capita increase precisely 5.416 times between 1970 and 2014? Probably not. Did it increase 4-6 times (1200 to 6500) in that period? Absent something better, I am OK with that and a dish of salt.

Do you have any suggestions for a better metric of how much manufacturing is being done in the US?

One other comment about manufacturing job counts and the back room: When a plant had payroll clerks and so on who calculated and printed the paychecks each week, those were counted as manufacturing jobs. Now that ADP and others do it as a service for many (most?) companies, it is considered a service sector job, not manufacturing.

John Henry

John said...

Blogger AReasonableMan said...

Re CNC, all true, of course but I should point out that Ford was writing about the axe handle in 1923. CNC, depending on how it is defined, dates to the 1970s or so.

The Smithsonian used to, may still, display a Blanchard lathe from about 1850 to make rifle stocks. Not CNC but fully automated. An unskilled operator put a chunk of wood between 2 centers, connected the belt drive and a fully shaped stock appeared a few minutes later.

https://en.wikipedia.org/wiki/File:Harpers_Ferry_gun_smith_shop_-_Blanchard_lathe_-_01.jpg

I suspect that Ford had a machine like this in mind for axe handles.

John Henry

cubanbob said...

buwaya puti said...
Griggs is often cited as a reason employers have stopped giving aptitude tests vs requiring credentials. I don't know if that's the whole story."

It's not the sole reason but it is a major reason. In part by creating the mystique of the college education. That only college educated people can get high paying jobs.

John a few years ago at a charity function I was talking to a guy who made a nice chunk of money selling his company to a large corporation. He was made a division manager and his division was moving to China. I asked him the obvious question regarding labor costs and he said that wasn't the problem. It was the problem of getting enough smart kids with a knack for math to work for them. Straight out of high school jobs that were paying $80,000. Jobs that could over a few years pay upto $120,000 a year (more with overtime). But not classy jobs. Not jobs in an office. Jobs that require long hours at times and outdoor conditions but how many college graduates earn between $80,000 to $120,000 a year? And that kind of money with no student debt. Moved to China simply because they couldn't get enough workers. That is so depressing.

buwaya said...

The more one digs into economics, especially macro, the more reasons for distrust turn up. I don't have better metrics for manufacturing because the data doesn't seem to exist. Economics is a pretty damn slippery business.
Among other statistics to distrust are inflation rates, unemployment rates, productivity measures.
The best we have are real things that can be counted, like employed persons and units of whatever.

ADP is a good example of the ability to reduce back room overhead. The job of the old payroll clerk, within the parameters of the old job, thats gone. However, we still have HR payroll clerks, AND ADP. Its just that the back room has gotten much more complicated.

Lewis Wetzel said...

Blogger AReasonableMan said...
Lewis Wetzel said...
The high cost of power is a significant drag on the economy here.

The location is a much bigger one.

Well, yes and no. Shipping would be extremely cheap from HI, except we've got the Jones Act. That means shipping to/from the US mainland has to go on a US flagged boat. Also, they have be unloaded/loaded by ILWU members. I was in the ILWU for about six months so I am allowed to gripe about them. They did a stupid thing negotiating our contract that cost me $600.
Legalized pot would be huge export from the Big Island. On the east side of the big island you get 60-80 inches of rain/year. Places on the mainland that have to pay for water or heat would be at a competitive disadvantage.

David said...

actually, he is saying that the mining and industrial jobs do not matter. They need special help but because all jobs come and go, he sees nothing special in them.

Lewis Wetzel said...

John said...
Blogger AReasonableMan said...
. . .
The Smithsonian used to, may still, display a Blanchard lathe from about 1850 to make rifle stocks. Not CNC but fully automated. An unskilled operator put a chunk of wood between 2 centers, connected the belt drive and a fully shaped stock appeared a few minutes later.

Like most people I used to believe that economy of scale only kicked in on farms with steam and gas engines. Then I discovered that as early as the middle 1800s agribusinesses were experimenting with giant plowing and harvesting rigs powered by living horses and oxen. There was a contraption with a dozen or so plowshares side by side, pulled by a team of six horses . . .

David said...

'Unfortunately, the US has largely missed the boat in making these machines, Japan, Germany and more recently China are the market leaders. I find this inexplicable.'

Incentives. The big fast money was (still is?) in consumer goods and apps. Contrast the market for smart phones with that for industrial robots.

Real American said...

The problem is politicians deciding that your job doesn't matter because of the weather 100 years from now might be ever so slightly too warm for their taste.

AReasonableMan said...

David said...
Incentives. The big fast money was (still is?) in consumer goods and apps. Contrast the market for smart phones with that for industrial robots.


This is a good point which highlights the baleful effect that financialization has had on US industry. German, family owned companies have the luxury of being able to think long term and do not have bankers breathing down their necks forcing them to absolutely maximize returns on capital. Trump should make a few industries national security priorities and use whatever means necessary to build them into world leaders. On my list would be machine tools, memory chips and monitors. The US should be competitive in everything necessary to make a computer.

Kirk Parker said...

Jim,

"Krugman. The guy who said the creation of the Internet would have the same impact as the fax machine."

I guess you aren't Russian?

Guildofcannonballs said...

I don't know what you people want those people, dead, who have done things that mattered, to do now they ain't be living.

Huxley, my boy Aldous, told you, and you flippantly, seemingly, shitheadedly, don't fucking even by God give a damn.

All things infinite includes everything, not just those things at any given time considered. People too yo, in the grandest of ways.

Maybe I be start being fast as you and having babies too, like Dwight wrote.

MaxedOutMama said...

First, describing manufacturing as being mostly "white" jobs is utterly clueless. Think Detroit, for starters. And then keep thinking. And maybe do some reading:
http://cepr.net/press-center/press-releases/decline-in-us-manufacturing-hurts-african-americans-disproportionately

Secondly, the difference between manufacturing/production and "service" jobs that do not produce goods and services for sale abroad shows up in the Current Account of the nation. If we are producing more domestically of anything that we need to use or can export, whether grain, lithium, batteries, bullets, coal, oil, autos, steel, trucks, tractors, shoes or kids toys, it favorably affects our balance of trade. Krugman is an economist, and knows this. But he is also a dishonest polemicist, so he does not mention it.

The problem with being a debtor nation and having a negative balance of trade shows up in the long term. Japan has been able to get by while running massive fiscal deficits because they had a strongly positive balance of trade. We have a negative balance of trade. Japan still has a healthy current account, but we do not.

If we do not want to end up like Greece or Venezuela, we need to redress our trade imbalances.

Politically speaking, the only way for most of the citizens of the nation to stop slowly becoming ever poorer in purchasing power/financial security terms is for us to rebuild production so we are not running these current account deficits. Otherwise we will be forced to balance the budget by cutting social benefits, the largest of these being Social Security, Medicare and Medicaid. I am not looking forward to dying in a ditch, which is pretty much what is happening to a lot of Greeks.

Guildofcannonballs said...

"With a job somewhere on some assembly line
I wish I had that life
I bet you wish you had mine"

Read more: Kid Rock - Midnight Train To Memphis Lyrics | MetroLyrics

Guildofcannonballs said...

I watched Boogie Nights recently.

I ain't jokin' or nuthin neither. I watched the whole thing.

Danno said...

One of our betters, the unassailably smart and wonky former Enron advisor Paul Krugman says blah, blah, blah.

The Enron employees were not available for comment!

Todd said...

Is there something different about coal mining and manufacturing jobs?

Well in the case of coal mining, a LOT of that job loss was a result of direct Government intervention to destroy that industry. Since the Government broke it, the Government should help fix it.

As to manufacturing, that one is much tougher as it was hurt by cheaper overseas competition (some unfair) but also unions and Government driving up the local manufacturing costs between overly generous compensation (from unions) and over regulation (from Government).

AJ Lynch said...

Every commenter here knows that a coal mining job can actually give the cola miner the money to be a the primary breadwinner and buy a home and pay for college and save money for retirement. That is why Trump said those types of jobs are important.

I wonmder why Krugman won't acknowledge this?

Dorry for the typoes- I am on my treadmill desk.

ken in tx said...

Between the 11th and 12th grades, I was a summer hire for the Alabama Highway Dept. I helped build Interstate 59/20 between Tuscaloosa and Birmingham. It did involve sweat and toil. I recently drove over that section and still feel a sense of pride about it. There were no females on the work site that I know of.

Paul said...

Does Krugman's job matter? Why can't Krugman's job be lost?

It's not like he as been right on much for most of his literary career.