Can government save manufacturing jobs?

By Robert Kuttner, 10/22/2003

EVERY WEEK seems to bring a new story of an American icon moving overseas. This week Levi's made its last pair of jeans in the United States.

The loss of manufacturing jobs is expected to be a huge issue in 2004. And union jobs with their $20-an-hour wages and good benefits are particularly at risk. Democrats and trade unionists will admit in private that those jobs will likely dwindle no matter what government does. However, government policy can affect the rate at which traditional manufacturing jobs disappear, what happens to the workers, and whether new jobs pay a living wage.

Several factors influence the loss of manufacturing jobs -- trade, productivity, the attitude of corporate executives, and the overall health of the economy. If the United States is more open than its trading partners, jobs flow out faster. China, for instance, benefits immensely from the trading system but flouts the rules.

China calls itself socialist, but increasingly practices state capitalism. It flagrantly violates the "transparency" and equal access that Washington preaches to the world. China's currency is artificially depressed. So are its wages. Foreign money comes into China only on terms dictated by the Chinese government. The state allocates most of China's investment capital and retains a controlling interest in most large enterprises. All of this ignores world trade rules.

Not surprisingly, China's huge trade surplus drains American jobs. Without being demagogues, the Democrats can fairly fault Bush for allowing Beijing a double standard on trade.

However, trade is only part of the story. Another big part is productivity. Jobs in, say, steel and autos are dwindling because workers and machines are getting ever more productive. Whether the cars are made in the United States, Mexico, or Japan, it takes ever fewer workers to produce a car. These industries will never have the work forces they once had.

So the real issues are whether we work to retain jobs that can be saved and what kinds of jobs replace the ones that go. There is no silver bullet, but government does have plenty of leverage, as two recent studies by the Russell Sage Foundation make clear.

The first, titled "Low-Wage America," exhaustively surveyed manufacturing and service industries across America. It found that employers have a lot of latitude in how they structure jobs and career opportunities. In the same industries, some companies chose a low road of high-turnover, low-skill, low-pay jobs as well as outsourcing and moving work overseas. Others made heroic efforts to upgrade worker skills and keep good jobs at home. Some manufacturing jobs simply can't compete with low-wage overseas labor, but others definitely can through better technology and skilled workers.

Government can help or hinder this process through its training and career-ladder programs (or their absence). It can use tax policies to make it easier for companies to move offshore -- as the Bush administration has done -- or harder. Unions can promote decent and competitive jobs, and government policy can be friendly to union-management partnerships or hostile.

A second forthcoming Sage book, titled "Downsizing in America," finds that a lot of job shedding is indeed occurring, especially in manufacturing. But over time this process is largely offset by the generation of new jobs. Most laid-off manufacturing workers, however, don't want to work at Wal-Mart. Again, the real question is how we ensure a plentiful supply of good jobs as technology keeps evolving.

This is not the stuff of barn-burner speeches or bumper stickers. It's small comfort to auto, steel, and textile workers who risk losing their jobs this year, not in some hypothetical policy future.

Yet there is a real difference between the two parties, and President Bush ought to be vulnerable on the issue. His party would let companies have their way with workers and would do little to ease painful transitions. The opposition party would devise policies to influence the quality of the new jobs, invest more in training, and insist that trade is a two-way street.

If this is a little complicated, well, reality is complicated. The task of political leaders is not just easy sloganeering. It's to explain and educate -- and lead.

Clarification: Last week, I misstated the dual system of voluntary and paid blood collection. It's still legal to pay blood donors, but skid row blood banks have been put out of business by government regulations that require whole blood collected from paid donors to be labeled as such. Many donors are still paid for plasma donations.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.