Enrico Moretti on the Future of Manufacturing

Q: Both presidential candidates pledge to restore the U.S. manufacturing industry. Some economists say that’s essential; others say it’s impossible. What’s your take? 

A: The last two years have been good years for manufacturing employment, but they are the exception. The previous two years were terrible. For the past three decades – not just during recessions – we have been losing an average of 370,000 blue-collar jobs per year. This trend reflects the globalization of the goods-producing sector and adoption of new technologies that increasingly automate production of physical goods. For example, for each car produced, General Motors today needs 70 percent fewer workers than in 1950. American manufacturing companies today produce more goods than in 1980, but they only need a fraction of the workers.

Even when some manufacturing survives, it is very different from the traditional blue-collar positions for workers with limited schooling that politicians like to talk about. For example, while production jobs have plummeted, the number of engineers with advanced degrees in manufacturing companies has doubled.

These trends are unlikely to change significantly. The jobs of the future are unlikely to come from the traditional manufacturing sector. By contrast, the innovation sector is growing in terms of jobs and salaries. Jobs in the Internet sector have been growing 200 times faster than the rest of the labor market. For all the talk about outsourcing, software is also growing. And it is not just high tech: scientific research and development, pharmaceuticals, digital entertainment, parts of marketing and even finance are creating jobs.

From this interview

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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