The political heat this year has been hard on free trade. Protectionism appeals because of a simplistic sense that “good” manufacturing jobs will return to America, restoring middle-class opportunity and pride. The reality, known intimately in supply chain circles, is rather more complex.
Reshoring is happening and a quick scan of Google news items under the search term “jobs” finds a roughly 3:1 ratio of job creators to job eliminators in either manufacturing or warehousing and distribution. The problem is that macro numbers are flat or down over the past 12 months in these two areas, even as US economic growth continues to improve.
We are adding jobs, but in steadily smaller numbers relative to equipment. Even as local or regional production strategies gain favour, job creation moves inexorably away from the golden-era past of solid middle-class jobs for unskilled but reliable workers.
The truth is that no one should expect prosperity unless they’re able to offer something creative and uniquely human to an employer.
Labor is not the Same Thing as Talent
A look at current employment data for the United States says something about where the jobs are and how our leaders might think about job creation for the next generation.
Manufacturing comprises only 10% of total private sector non-farm employment. This is down from a peak of 22% of the total in 1977. It’s also one of only two major sectors to see an absolute decline over the past year. Outside of a nascent craft production movement, this figure looks set to keep going down.
Research that SCM World has conducted since 2012 shows what politicians refuse to face, which is that advanced automation and new production technologies are both creating and destroying jobs domestically.
The axis of change is not about trade but about skills, and most say they have trouble finding the talent.
Also showing tepid progress is employment in warehousing and transportation, which added just 40,000 jobs since June 2015. Amazon alone is probably doing enough to own this entire number, which reflects moves like the 1,500 jobs it’s creating in Jacksonville. Here again, automation in the form of packing robots, computer-guided materials handling systems and, soon, drones or driverless vehicles, are eliminating the need for unskilled labor.
Large employers, however, still say they’re hungry for talent. The difference is right there in our semantics: labor is not the same as talent. Opportunity lies in adding uniquely human capabilities to an increasingly powerful set of supply chain technologies. This means problem solving, collaboration and an ability to work with advanced systems.
Service with a Smile
Where we do see strong job growth in business services, healthcare and hospitality, the common thread may be the interface with customers. Each of these sectors, all of which are significantly larger than manufacturing or distribution, depend heavily on person-to-person problem solving at the point of customer demand.
Each also benefits from fast advancing communication and analytical tools that allow them to better serve the customer. Nurses with iPads, accountants with laptops and theme parks enabled with RFID all offer a more empowered human employee to help customers.
Even retail, which employs 16 million Americans, saw decent job growth in the past year. E-commerce may be destroying all kinds of classical retail formats, but well-informed sales associates are still in demand.
Political Messaging
Job creation in the United States has little to do with trade policies and much to do with people policies.
For workers displaced by factory closings, we could improve knowledge of information systems, automation equipment and new business models like Uber with free or subsidized access to community colleges. Assistance could be provided to upgrade home office facilities and bring external marketplaces into reach.
We could also invest in more vocational education at the high school level. Amazing new tools are coming out now that could offer creative young people a realistic path to small business viability in fields from metalworking to pet care.
We could even provide low or no-interest loans to small entrepreneurs ready to try their hand at business.
Jobs, opportunity and pride can’t be given. They must be earned.
