Promise of More Routine Manufacturing Jobs in the Age of Automation is Fruitless

Change is the law of life. And those who look only to the past or present are certain to miss the future.

John F. Kennedy

In the Republican primary for president in 2016 President Trump had campaigned for, and is now promising as President, to create more jobs in manufacturing industries. Even if he is able to attract some off-shored companies and/or encourage business formations in manufacturing, those companies will be using new technologies. The new technologies with robots, equipped with artificial intelligence and computerized production lines, will not need as many workers as in the past. And whatever worker needs they might have, they would have to be for skilled workers. Hence the promise, devoid of any plan to train workers in new technologies, may turn out to be a great disappointment to the administration and especially to workers whose hopes were boosted by that promise.

The special report Learning and earning, The Economist, January 14-20, 2017, emphasized that, in this age of automation, workers may have to be engaged in life long learning. Though college graduates earn higher rewards in the job market than high school graduates, earnings growth of college graduates has slowed down. Cognitive skills are still important in todays labor market, but technology is also changing the job prospects of the college-educated workforce. In fact, The Economist report shows that the US average cognitive intensity of tasks, carried out by employed college graduates, has been decreasing since the year 2000.

No doubt there is a shortage of high-skilled people due to demand shift. Most economists are of the view that the demand shift is the result of skill-based technological change (SBTC) and globalization. SBTC has increased the demand for skilled labor, and intense competition for standardized products has caused off-shoring and outsourcing of production and jobs from the US.

Most economists also point out the polarization of job opportunities. There is an increasing demand in both high-skill high-wage occupations and low-skill low-wage occupations. Middle-skill jobs that require routine tasks are decreasing. Manufacturing sector employment is affected the most by SBTC and globalization. Diden Tuzemen and Jonathan Willis, in a working paper for the Federal Reserve Bank of Kansas City find that the employment share of manufacturing, relative to total employment (excluding self-employed and military), declined from 22% to 11% from 1983 to 2012. Mid-skill occupations were mainly concentrated in construction and manufacturing. For 16 to 64 years old workers, demand shifts were followed by supply shifts. That kept wage pattern for different skills, relative to the median wage for all workers, almost unchanged.

The pace of technological developments requires updating of technical skills as well as critical thinking and analytical skills on a continuing basis, even for college graduates. Technologically sophisticated robots would handle routine work. The National Center for Education Statistics reports data on Adult Skills in International Context for 16-64 years old. For years 2012-2014 the average PIAC (Program for International Assessment of Adult Competencies) score for US, for problem solving in technology-rich environments, is the worst among 19 developed countries. President Trumps efforts to create more jobs in manufacturing will not be very successful, unless they are backed by broad-based and strategically implemented education and training programs in cooperation with the private sector.

New skills require not just standardized training but a hybrid of skills to deal with hybrid jobs (see The Economist). For example, there is a high demand for social skills (working in teams) in many jobs in addition to technical skills. Social skills complement cognitive skills and have an independent effect on productivity and wages (See David Deming, National Bureau of Economic Research, Paper N0. 21473).

We are lagging behind in educated and skill trained workers, especially since the 1980s. Many skilled immigrants have partially filled this gap. The question is, who would finance education and training programs on an ongoing basis for workers? Some big businesses, such as Microsoft, Google , AT&T, pinched for high-skilled workers in the face of high demand, may sponsor in-house programs. But many businesses would be reluctant to allocate resources to expensive training programs over the long run, especially when faced with the fast pace of technological developments and high mobility of skilled workers.

Therefore, national public policy, in cooperation with the private sector and backed by a significant amount of resources, must embark on ongoing demand-based comprehensive high quality education and training programs. It is not enough to provide more resources. They must be strategically allocated if President Trump has any hope of creating high paid manufacturing jobs. In addition to brick and mortar schools, online education and training with high quality standards could also be part of ongoing skill upgrading and education. As former Fed chairman Ben Bernanke states:

No economy can succeed without a high-quality workforce, particularly in an age of globalization and technical change.

For their own healthy economic future, Americans must demand concrete and deliberate actions and resources for education and training programs on a continuing basis from national and local policy makers.

Mathur is chair and professor of economics and professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio. He resides in Ogden, Utah.