Chain Reactions

Good News For U.S. Economy (Unless You Work In A Factory)

Can something be good news for the U.S. economy as a whole, but bad news for factory workers? Yes, according to the Wall Street Journal. In a Jan. 22, 2007, article by Mark Whitehouse titled, “For Some Manufacturers, There Are Benefits to Keeping Production at Home” (sorry, you have to be a subscriber to read it, so I can’t post a link to it), the WSJ takes a close look at data from the Federal Reserve indicating that, contrary to public perception, there are several manufacturing niches where making the products in the U.S.A. is the most economical route.

The catch (there’s always a catch) is that the success these niches are enjoying isn’t really duplicatable. The niches include very large—and expensive—consumer items, such as top-of-the-line televisions and refrigerators.

The WSJ reporter quotes Columbia University’s Bruce Greenwald, who says, “If the thing being sold to the U.S. market is locally customized, delicate, or very large, chances are it’ll continue to be produced in the U.S.” Greenwald adds this market reality also holds true for manufacturing processes that require almost no labor, such as chemicals, high-tech components and metal fabricating. “Manufacturing in the U.S. is headed toward plants that have no people in them,” Greenwald says.

So again, we hear echoes of the more production/fewer laborers equation. The WSJ uses this example: if output per hour rises by 3% annually, then the average inflation-adjusted wage will more than triple over 40 years. If you have a job, then, your income will tend to rise accordingly; I guess the lesson there is, just make sure your job isn’t a factory worker.

TAGS: Supply Chain
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