Where Have all the Jobs Gone?

This past week President Obama unveiled his plan for creating new jobs in the United States. These are not the kinds of jobs, of course, that are currently held by undocumented immigrants, because no one else really wants those jobs. A good deal of discussion in the media (but not so much in the political sphere) has revolved around the disappearance of manufacturing jobs in the US. An important part of this phenomenon is related to the rapid increase over the past few decades of the labor force in developing countries, especially in countries like China with a favorable age structure (from falling fertility) that encourages those workers not just to make stuff for lower wages than might be paid in the US, but also to spend their earnings on the very products that they are making, rather than spending it on feeding more family members, as would happen in a high fertility country. In other words, there has been a global shift not just in who is making things, but also in who is buying things. Louis Uchitelle has a lengthy article in today's New York Times discussing this transformation of manufacturing.

It may seem remarkable that America’s fall — or impending fall — from first place in manufacturing isn’t generating all that many headlines, certainly not when compared with the controversies over the national debt or persistent unemployment. One reason may be that the nation’s political leaders don’t see manufacturing as a problem. Put another way, they don’t necessarily regard making an engine, a computer or even a pair of scissors as having as much value as investment banking or retailing or a useful Web site.
“You have a culture within the elites of both political parties that says manufacturing does not matter, and industrial policy will do more harm than good,” says Ronil Hira, an assistant professor of public policy at the Rochester Institute of Technology. 
“The reason you no longer get much of an outcry over this exodus has to do mainly with jobs,” says Heather Boushey, a senior economist at the Center for American Progress. “Less than 12 percent of the American work force is in manufacturing today, down from 30 percent in the 1970s. So there isn’t the same level of public concern.” 

The bottom line seems to be that China, in particular, has subsidized the relocation of factories from the US (and Europe) to China, and that has raised local wages and local buying power and has essentially reconfigured the world's manufacturing landscape. Given the global population trends, not to mention the complex political landscape discussed in the article, it seems unlikely that this trend will be reversed.