Manufacturing has been in the spotlight in recent years as the U.S. and China engage in technology rivalry while companies seek to reposition much of their supply chains domestically.
President Joe Biden has touted his policies to encourage more U.S. manufacturing of chips and clean energy technologies. Earlier this month, his administration pledged up to $6.6 billion to enable Taiwan Semiconductor to expand its facilities in Arizona. And last month, the administration reached a $19.5 billion deal with processor giant Intel to finance four new U.S. factories.
But data in the United States and other global manufacturing centers shows that employment is a different matter, according to Dani Rodrik, a professor of international political economy at the Harvard Kennedy School.
IN article published in Project Syndicate The economist noted Tuesday that productivity in U.S. manufacturing has increased nearly sixfold since 1950, while productivity in the rest of the economy has doubled.
“The result has been a stunning increase in the manufacturing sector’s ability to produce goods, but also an equally dramatic decline in its ability to create jobs,” he wrote, with 6 million manufacturing jobs lost since 1980.
And despite the America First agenda and the trade war with China, the share of U.S. manufacturing employment in the nonfarm sector has fallen to 8.4% from 8.6% when Donald Trump was president, Rodrik said.
Under Biden, that share has fallen further to 8.2%, even as the government is pumping out billions to companies and the US private sector has committed more than $200 billion to new manufacturing projects following the passage of his Inflation Relief Act and the CHIPS Act. and science.
“A skeptic might argue that Biden’s policies have not fully borne fruit and are not yet reflected in official statistics,” Rodrik added. “But the fact is that extremely capital-intensive semiconductor foundries create few jobs relative to the physical investment they require.”
For example, at new TSMC factories in Arizona, the company plans 6000 jobs will be created, which Rodrik estimates will be more than $10 million per job. And even if tens of thousands of additional jobs are created among TSMC’s suppliers, “that’s a miniscule employment gain,” he said.
Likewise, manufacturing’s share of total employment declined in Germany and South Korea, Rodrik continued. And in China, the number of factory jobs has declined more than simply, both in absolute terms and as a percentage of total employment.
“Automation and skill-based technologies have made it extremely unlikely that manufacturing will become the labor-intensive activity it once was,” he said. “Whether we like it or not, services such as retail, care and other personal services will remain a major driver of job creation.”
Of course, the CHIPS Act and similar policies to encourage domestic manufacturing are not necessarily wrong, since they can still stimulate innovation, but “rebuilding the middle class, creating enough good jobs, and revitalizing declining regions requires a completely different set of policies.” politics,” he concluded.