Business, The Washington Post

Obama’s elusive promise to deliver 1 million new manufacturing jobs

During President Obama’s 2012 reelection campaign, he told voters that manufacturing jobs would be a crucial part of the American economy’s resurgence. His administration set a goal to “create 1 million new manufacturing jobs by the end of 2016.”

At the time, manufacturing insiders cheered. The national unemployment rate had fallen 3 percentage points from its high point in 2009. The U.S. economy had added 4.4 million jobs since 2009, on its way to adding 13 million to date.

But factory jobs haven’t gotten the bump the president strived for: Only 331,000 of those many millions of new positions created since the start of his second term have come in manufacturing.

The United States would need to create 74,000 manufacturing jobs each month to reach Obama’s goal by the end of the year, and prospects are not good. American manufacturers have actually shed 20,000 jobs since January 2015 amid difficult economic circumstances.

“It would be virtually impossible to achieve the goal,” said Scott Paul, president of the Alliance for American Manufacturing. “It would take job growth in manufacturing on an unprecedented scale.”

Of course, employment in the sector could look much worse. The Obama administration led the charge to save the American auto industry in the aftermath of the Great Recession, and mortgage industry bailouts provided a lifeline to builders that otherwise might have disappeared. And an injection of stimulus spending for road and other “shovel-ready” projects offered a shot in the arm.

Longer term, the administration has invested $2 billion in the past four years in community college job-training programs, half going toward skills needed in manufacturing careers, according to White House measurements.

“Prior to the president taking office, many thought U.S. manufacturing faced inevitable decline and that we could no longer compete for new jobs and new manufacturing innovation,” Jason Miller, deputy director of the National Economic Council, said in a statement. “Today, companies from around the world increasingly point to the U.S. as the most attractive location in the world for investment and for manufacturing.”

Indeed, Miller said U.S. manufacturing has added more than 800,000 jobs since 2010 — the sector’s strongest performance since the 1990s.

Still, even greater progress has been stymied by larger economic forces. A slowdown in China and weakness overseas triggered a pullback in production, though there have been glimmers of expansion in recent months. Oil prices have plummeted, bringing a pause to the nation’s once-surging energy industry and making it harder to invest in more expensive alternate fuel sources. And some companies continue to move factories outside the United States where labor costs are lower.

Carrier, for example, in February announced that it would close two Indiana plants that employ 2,100 people and open factories in Mexico. Ford in April said it planned to invest $1.6 billion in a Mexican factory that would create 2,800 jobs.

And manufacturers are trying to sell to an American public that just doesn’t buy as much “stuff” as it used to. In 1980, nearly half of American consumption was spent on goods rather than services, according to the Organization for Economic Cooperation and Development. Today, goods account for one-third of American consumption.

 “The story is a combination of technological change and unresponsive demand,” said Robert Lawrence, professor of trade and investment at Harvard’s John F. Kennedy School of Government. “That’s what the Obama administration is swimming against.”
Under such circumstances, he says, 1 million manufacturing jobs by the end of the year was a dream.
“It implies a kind of power that unfortunately no one has,” he said.
In 1961, 29 percent of the American labor force worked in manufacturing, according to federal statistics. By 1980, that share was down to 20 percent. Follow that trend, as Lawrence did in his research, and the share reaches 10 percent in 2010, which fits the industry’s actual experience.
“I think when anyone makes a public pledge, the hope and goal is to make manufacturing strong in this nation,” said Jennifer McNelly, executive director of the Manufacturing Institute, who is encouraged by the 331,000 manufacturing jobs created.
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