Center for Business and Economic Research - Ball State University


CBER Data Center
Projects and PublicationsEconomic IndicatorsWeekly CommentaryCommunity Asset InventoryManufacturing Scorecard

About

Commentaries are published weekly and distributed through the Indianapolis Business Journal and many other print and online publications. Disclaimer

RSS Feed

Disclaimer

The views expressed in these commentaries do not reflect those of Ball State University or the Center for Business and Economic Research.

Recent

Two Key Economic Lessons in One BillHoosiers face trade-offs and opportunity costs in the wake of SEA1.

Time to Fix Economic Development PolicyAllocating tax dollars to land development won’t cause economic growth.

The Unanticipated Effects of SB1Businesses, governments and households may all feel the effects.

The Stupidest of PoliciesThis whipsawing of tariff rates has unnerved financial markets, which on Wednesday, were toying with a liquidity crisis.

View archives

Top Tags

jobs and employment 261
economics 201
state and local government 188
education 186
economic development 171
indiana 171
budget and spending 145
taxes 144
law and public policy 142
workforce and human capital 139
Browse all tags
Reporter / Admin Login

June 14, 2015

Manufacturing Myths and Realities

This week my center, along with Conexus Indiana, released a couple of studies on manufacturing and logistics. One was our annual report card, and the other was our attempt to debunk some pervasive myths about manufacturing in the U.S.

Indiana continued to do well on the report card, earning a top spot. We improved in several key areas including human capital and unfunded liabilities, and have maintained a strong fiscal environment. The only unpleasant news was an increase in health care premiums relative to other states. Still, I am amazed at how prevalent untruths are about the current state and future of manufacturing and logistics. Let me set straight the record.

There are many otherwise smart and educated folks in the country who think that our manufacturing base is shrinking. It simply is not. On an inflation-adjusted basis, last year was the record year of manufacturing production in the United States. Absent some unpredicted collapse of the world economy, 2015 will be the new record year. The data are stunningly simple to obtain from the Department of Commerce’s website. Sure, there are ups and downs with recessions, but the trend is obvious. There is really no reason why a literate person with a computer and internet connection should suppose otherwise.

A second big myth is that we are losing huge numbers of jobs to foreign trade. Here is where there is plenty of well-deserved confusion because the truth is inconvenient to many interest groups who do much to sow confusion. A bit of honest analysis tells us something different, and it is best to look at the decade from 2000 to 2010 to understand it.

The first decade of this century saw the largest declines of manufacturing employment in history. But, a bit of algebra and data allows us to build an equation that can solve the job loss riddle. As it turns out, 87 percent of job losses in the last decade were due to productivity gains. We are simply very good and getting better at manufacturing, and trade deficits accounted for no more than 0.08 percent of annual job losses per year over the last decade.

The final myth is that new manufacturing jobs pay less. The average new hire in manufacturing in Indiana makes more than $20 an hour. This is good money even though it is less than most retiring workers made. The simple truth is that millennial workers are replacing baby boomers and that masks the fact that new manufacturing jobs are very high paying opportunities.

Manufacturing production is growing and when we account for retirements and turnover, Indiana alone will have 125,000 manufacturing job openings per year over the next decade. By way of comparison, we will only have 70,000 high school graduates per year.

Sure, we have work to do to boost manufacturing. Our corporate taxes are too high, and some countries continue to interfere with free trade through currency manipulation, but the real problem may be the need to better prepare folks to take these jobs.

Link to this commentary: https://commentaries.cberdata.org/790/manufacturing-myths-and-realities

Tags: jobs and employment, indiana, manufacturing


About the Author

Michael Hicks cberdirector@bsu.edu

Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. Note: The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body.

© Center for Business and Economic Research, Ball State University

About Ball State CBER Data Center

Ball State CBER Data Center is one-stop shop for economic data including demographics, education, health, and social capital. Our easy-to-use, visual web tools offer data collection and analysis for grant writers, economic developers, policy makers, and the general public.

Ball State CBER Data Center (cberdata.org) is a product of the Center for Business and Economic Research at Ball State University. CBER's mission is to conduct relevant and timely public policy research on a wide range of economic issues affecting the state and nation. Learn more.

Terms of Service

Center for Business and Economic Research

Ball State University • Whitinger Business Building, room 149
2000 W. University Ave.
Muncie, IN 47306-0360
Phone:
765-285-5926
Email:
cber@bsu.edu
Website:
www.bsu.edu/cber
Facebook:
www.facebook.com/BallStateCBER
Twitter:
www.twitter.com/BallStateCBER
Close