I'm trying to understand the logic behind the job multiplier number, particularly for the examples of health care vs manufacturing, where the average pay was similar (health care slightly higher). Why the difference? Are those extra jobs productive? Are they equally well-paying? I can imagine a manufacturing plant that generates toxic waste -- there's jobs in the cleanup sector, but I'm not sure it's a net win for the local economy.
It seems a better metric would be "dollars brought into the local economy". Perhaps if I'm making a widget that's for "export" (no local use) all of my wages come in from outside. If I'm in healthcare, ultimately my customers are local and there's no dollars brought into the local economy?
How does industrial-scale farming (like here in IL) work out? We grow way more food than we eat, most of the "product" ends up for "export".
Some economists are fond of the term “Creative destruction”. But destruction in many cases does not create, but instead consolidates. The result is growth of ever larger corporations. The smaller businesses are destroyed in the process, and many jobs are lost.
A few examples:
Retail bookstores were destroyed by Amazon
Retail record stores were destroyed by Apple
Retail hardware stores were destroyed by Home Depot
Print media advertising (newspapers, magazines) were destroyed by Google
At the 1963 March on Washington (for Jobs and Freedom), many held placards that read “We March for Jobs for All Now”.
Jobs+Families+Schools+Safety. I think these are all necessary for building a healthy, functional community.
Jobs are the foundation, and are especially important for men. Work gives one a sense of dignity and purpose. Without jobs, men don't form families. Two-parent Families are a super power, economically and psychologically. Families produce children, thus the community needs Schools. Supporting every good school are lots of healthy families, and lots of Moms and Dads. And there must be public Safety, for workplaces, schools, and families to thrive. There you have it: Jobs+Families+Schools+Safety.
If you want to destroy a community, take away the jobs. The rest naturally crumbles. Approx 70% of Americans do not have a college education. We need jobs for them. But starting in the 1990's, corporate America moved many of those jobs overseas. One of the corporate icons of this movement was (ironically) named Jobs.
Since the entire conversation regarding manufacturing and deindustrialization has provoked such insightful debate, I’d like to throw out one last question to Clifton and The Glenn Show community. Recently Ford announced plans to license CATL technology for an LFP battery plant in Michigan that aroused considerable ire both from Congress and from the local residents near the proposed plant. Of course the chief complaint was that CATL was a Chinese company and obviously every Chinese company was beholden to the whims of the big, bad CCP. Likewise another Chinese company Gotion is also pushing forward with plans for a battery plant in Michigan despite similar protests.
The plants would certainly bring jobs and know-how to America, yet many seem to believe that national security interests, however vaguely articulated, trump any economic concerns. Given the Biden administration’s stated green goals, working closely with China would almost certainly make the attainment of such goals more feasible. I wonder if others are also of the belief that economic propensity should ultimately be subordinate to geopolitics.
Here we actually have an opportunity to reverse some of the hollowing out alluded to by working with China, yet it's become almost social and political suicide to say so. I fear that we're shooting ourselves in the foot in so many different ways.
Given that you clearly believe in the economic importance of manufacturing and the resulting multiplier effect as far as indirect jobs created, I would have to assume that you would support Chinese manufacturing plants in the US, Clifton. But I'm curious if that's actually the case. How would you ultimately balance the economic versus the geopolitical?
Hi Clifton, I appreciate that you brought up automation because I think it has been severely undercounted. As I understand it, initially the steel mills suffered from foreign competition, but now the big problem (for labor) is to get costs down the plants have almost no people! That seems to be the pattern, first move to cheaper labor, then to much more efficient technology. All the stats I’ve seen have indicated job losses to automation are made up for somewhere else, but that doesn’t seem right… secretaries are almost obsolete now that there are computers and men know how to use them, as are all kinds of administrative and record keeping jobs. Online ordering and kiosks have made stores and fast food have far fewer employees. Remember when you booked a vacation through a travel agency instead of online? I studied technical translation thinking that would be a good partime gig, but that is gone too. Even things like counseling and tutoring are being done by bots (or prerecorded videos) It seems like the only growing fields are drivers, construction, coding, and middle management. Am I missing something? If I’m correct, aren’t all these problems about to get much worse?
Clifton, I’d like to throw out another question at you. You highlight the fact that foreign born workers now make up almost 18% of the civilian labor force and that more importantly immigrant communities aren’t evenly dispersed across the country. I’ve suggested elsewhere that even elite immigration from South Asia and East Asia has negative ramifications as far as social cohesion goes. Apart from possibly displacing native born workers, the children of Asian immigrants have clearly exacerbated racial disparities in academic achievement and contributed in part to pushback to neuter gifted education. For instance, the recent push in California to establish a new framework for teaching mathematics was based on data showing that between 2004-2014, roughly 32% of Asian American students were in gifted math education compared to around 8% of white, 4% of Black and 3% of Hispanic students. Don’t be fooled by the usual rhetoric about combating white supremacy. The actual data shows that the Asian/non-Asian gap is far more significant than the gap between white students on the one hand versus Black and Hispanic students on the other.
I made the argument in another thread that America has become less like a traditional nation state and more like a corporation, the goal being to do whatever necessary to maximize the output of America Inc., while sacrificing the cultural cohesion and unity necessary for a country to survive long term. I’m skeptical that Chinese or Indian immigrants in Silicon Valley feel much kinship with Black Americans living in Harlem or the south side of Chicago or for that matter with white Americans living in flyover country. Truth be told, many probably feel more kinship with their nations of origin than with many of their fellow countrymen.
Yet we’ve sort of accepted that Faustian bargain given the enormous contributions that Asian immigrants have made to STEM in America. Certainly our political and pundit classes love pushing for immigration from places like India, China or South Korea, while almost never mentioning the Black or Hispanic populations in this country as potential sources of human capital. Despite their glib assertions of politically correct orthodoxy, what does this suggest about what the intellectual class in this country really believes when it comes to race?
Given the rise of places like Taiwan or South Korea in past decades and the rise of China today, it’s not even clear that the gambit to import elite Asian immigrant labor is likely to succeed long term as far as ensuring American technological preeminence. For instance, around 90% of semiconductor and EV battery manufacturing takes place in East Asia today. I wonder if you believe that America’s penchant for importing elite immigration is still worth the social price this country pays in terms of creating such a culturally and ethnically disaggregated population.
With the cost of labor wages and benefits in this country, deindustrialization would hardly seem to have been preventable. They used to say GM was a health insurance company that assembled some cars - that's not sustainable in an industry that has competitors that don't have to play by those same rules, and we know what happened to GM.
I had a manufacturing facility in Compton and Watts California for over 50 years. Hispanic to black requests for employment applications ran about 200 to 1.
That is where I learned that you could graduate from the local high school without learning to read. We had about 5 white applicants. They were either hopeless alcoholics or were accompanied by a probation officer. We did hire 2 Asians. One came from Nellis School for Boys in Whittier. (Local reform school)
His first day at Nellis he met with a counselor, who was also Japanese. The counselor told him if he didn't straighten up he would kill him, rather than let his disgrace race. Seem to work.
You overlook trade policy as a factor, or, perhaps you buried it under Government Policies. The deindustrialization was heavily influenced by the flood of cheaper, substitute, products we imported from the Far East. American manufacturers have been under tremendous pressure to produce goods at low prices since imports were able to undercut them. The only way to do that was to utilize cheap foreign labor to do so. Then, of course, as expected, those foreign manufacturers have been the primary source of innovation for those aging, but necessary products.
I will also agree that immigration has had a profound effect. Not only do the immigrants take the jobs that still exist in US manufacturing, but they tend to suppress wage growth due to the supply of labor. Personally, I’ve been amazed at how many Vietnamese, Cambodian, and Chinese families have come, one after another, through chain migration, to the factory where I used to work.
One last point. The unnecessary and counterproductive emphasis the US has placed on college education has distracted the Black population, especially those with lower income, from obtaining more valuable skills in the trades. Thanks to college practices of charging higher income families to pay, not only for their own kids, but also for the tuition of low income students (through obscenely high tuition), many Black families are romanced into the idea of a free (or very low cost) college education for their kids. It would be interesting to study the success of Black students engaged in the trades (after brief training, post high school, or even during high school), relative to those who go into the college ranks, only to drop out before graduation.
I always find anything Mr. Roscoe writes to be thoughtful and well-researched. It is hard to argue with his data; the multiplier effects seem impressive in their inexorability. I have always thought that the lack of well-paying jobs for those with a modest education was problematic after the brief period of halcyon days following World War II. But I have heard some refer to this group., both black and white as essentially an artificial middle class whose days were numbered from early on. Are there any policy recommendations or approaches that we can take from all this that might have the effect of making things better? College for all is a pipedream and when everyone is "college-ready," what we will see will be little more than the thirteenth grade. I do not see any obvious way out of this.
I have spent more decades than I like to record in business and policy consulting, and believe you and I met when Professor Loury and I were relatively young economists at a symposium on natural gas regulation in the 1980s. For my sins in making a career of calculating the impacts of government regulation, I have had to deal with oversimplified multiplier calculations far too often. Regrettably, that is also what I find here. First, Mr. Roscoe’s numbers fail to account for the percentage of the African-American population holding manufacturing jobs before and after deindustrialization. Without that, his contribution might shed light on effects of deindustrialization in general but not its differential effects on any particular group. Second, using multipliers as he does for an economy-wide issue like deindustrialization is a fundamental error. It fails to take into account the fact, pace the first comment, that over time the total workforce does shift from one occupation and industry to another. It is simply false that “indirect” jobs supported by US workers were cut in half or more over the period of deindustrialization, which is what his multiplier stories seem to imply. If every disastrous effect on unemployment forecasted by multiplier analysis since it came in vogue had been accurate, the only people working today would be those doing the studies.
Studies done with valid analytical methods show that deindustrialization could lead to fewer workers being employed, but far less than Mr. Roscoe’s naive multiplier analysis implies. Applying even the simplest of applied general equilibrium models -- which have become the standard in both consulting and government agencies -- to do this analysis also makes it possible to think about how to differentiate impacts on different demographic groups. For a reasonably straightforward explanation of the reason analysts have adopted the general equilibrium approach, I suggest a report done by the Science Advisory Board for the EPA on use of economic models: https://www.epa.gov/system/files/documents/2023-02/EPA-SAB-17-012_1.pdf, to which I confess to being a contributor. See in particular p. 49 which points out the failing of multiplier-type models to take into account overall resource (i.e. labor) supply.
Even if the statistics given 'prove' that deindustrialization is the most important factor explaining Black poverty, I'd say, 'So what?' Because I don't see anything that can be done about it, and my life experience tells me that politicians will execute/install policies that will most probably not work. Even probably make matters worse; see, 'The Myth of American Inequality' by Gramm, Ekelund and Early for the details.
But, in fact, people (including Black people) have moved from one state to another when they heard about better opportunities elsewhere. The northern factory workers, many of them, came from poorer, rural, southern states. They weren't born as factory workers. They learned how to be productive in those industries. Which is the kind of adaptation to circumstances that seems to be missing now.
I'm trying to understand the logic behind the job multiplier number, particularly for the examples of health care vs manufacturing, where the average pay was similar (health care slightly higher). Why the difference? Are those extra jobs productive? Are they equally well-paying? I can imagine a manufacturing plant that generates toxic waste -- there's jobs in the cleanup sector, but I'm not sure it's a net win for the local economy.
It seems a better metric would be "dollars brought into the local economy". Perhaps if I'm making a widget that's for "export" (no local use) all of my wages come in from outside. If I'm in healthcare, ultimately my customers are local and there's no dollars brought into the local economy?
How does industrial-scale farming (like here in IL) work out? We grow way more food than we eat, most of the "product" ends up for "export".
Some economists are fond of the term “Creative destruction”. But destruction in many cases does not create, but instead consolidates. The result is growth of ever larger corporations. The smaller businesses are destroyed in the process, and many jobs are lost.
A few examples:
Retail bookstores were destroyed by Amazon
Retail record stores were destroyed by Apple
Retail hardware stores were destroyed by Home Depot
Print media advertising (newspapers, magazines) were destroyed by Google
Movie theaters were destroyed by Netflix
At the 1963 March on Washington (for Jobs and Freedom), many held placards that read “We March for Jobs for All Now”.
Jobs+Families+Schools+Safety. I think these are all necessary for building a healthy, functional community.
Jobs are the foundation, and are especially important for men. Work gives one a sense of dignity and purpose. Without jobs, men don't form families. Two-parent Families are a super power, economically and psychologically. Families produce children, thus the community needs Schools. Supporting every good school are lots of healthy families, and lots of Moms and Dads. And there must be public Safety, for workplaces, schools, and families to thrive. There you have it: Jobs+Families+Schools+Safety.
If you want to destroy a community, take away the jobs. The rest naturally crumbles. Approx 70% of Americans do not have a college education. We need jobs for them. But starting in the 1990's, corporate America moved many of those jobs overseas. One of the corporate icons of this movement was (ironically) named Jobs.
https://en.wikipedia.org/wiki/March_on_Washington_for_Jobs_and_Freedom
Always enjoy Mr. Roscoe's analysis
free trade as government policy surely led to a lot of this .
Since the entire conversation regarding manufacturing and deindustrialization has provoked such insightful debate, I’d like to throw out one last question to Clifton and The Glenn Show community. Recently Ford announced plans to license CATL technology for an LFP battery plant in Michigan that aroused considerable ire both from Congress and from the local residents near the proposed plant. Of course the chief complaint was that CATL was a Chinese company and obviously every Chinese company was beholden to the whims of the big, bad CCP. Likewise another Chinese company Gotion is also pushing forward with plans for a battery plant in Michigan despite similar protests.
The plants would certainly bring jobs and know-how to America, yet many seem to believe that national security interests, however vaguely articulated, trump any economic concerns. Given the Biden administration’s stated green goals, working closely with China would almost certainly make the attainment of such goals more feasible. I wonder if others are also of the belief that economic propensity should ultimately be subordinate to geopolitics.
Here we actually have an opportunity to reverse some of the hollowing out alluded to by working with China, yet it's become almost social and political suicide to say so. I fear that we're shooting ourselves in the foot in so many different ways.
Given that you clearly believe in the economic importance of manufacturing and the resulting multiplier effect as far as indirect jobs created, I would have to assume that you would support Chinese manufacturing plants in the US, Clifton. But I'm curious if that's actually the case. How would you ultimately balance the economic versus the geopolitical?
Hi Clifton, I appreciate that you brought up automation because I think it has been severely undercounted. As I understand it, initially the steel mills suffered from foreign competition, but now the big problem (for labor) is to get costs down the plants have almost no people! That seems to be the pattern, first move to cheaper labor, then to much more efficient technology. All the stats I’ve seen have indicated job losses to automation are made up for somewhere else, but that doesn’t seem right… secretaries are almost obsolete now that there are computers and men know how to use them, as are all kinds of administrative and record keeping jobs. Online ordering and kiosks have made stores and fast food have far fewer employees. Remember when you booked a vacation through a travel agency instead of online? I studied technical translation thinking that would be a good partime gig, but that is gone too. Even things like counseling and tutoring are being done by bots (or prerecorded videos) It seems like the only growing fields are drivers, construction, coding, and middle management. Am I missing something? If I’m correct, aren’t all these problems about to get much worse?
I'm very amused here by the colorblind responses about how deindustrialization negatively impacted black folks. Lol!
Clifton, I’d like to throw out another question at you. You highlight the fact that foreign born workers now make up almost 18% of the civilian labor force and that more importantly immigrant communities aren’t evenly dispersed across the country. I’ve suggested elsewhere that even elite immigration from South Asia and East Asia has negative ramifications as far as social cohesion goes. Apart from possibly displacing native born workers, the children of Asian immigrants have clearly exacerbated racial disparities in academic achievement and contributed in part to pushback to neuter gifted education. For instance, the recent push in California to establish a new framework for teaching mathematics was based on data showing that between 2004-2014, roughly 32% of Asian American students were in gifted math education compared to around 8% of white, 4% of Black and 3% of Hispanic students. Don’t be fooled by the usual rhetoric about combating white supremacy. The actual data shows that the Asian/non-Asian gap is far more significant than the gap between white students on the one hand versus Black and Hispanic students on the other.
I made the argument in another thread that America has become less like a traditional nation state and more like a corporation, the goal being to do whatever necessary to maximize the output of America Inc., while sacrificing the cultural cohesion and unity necessary for a country to survive long term. I’m skeptical that Chinese or Indian immigrants in Silicon Valley feel much kinship with Black Americans living in Harlem or the south side of Chicago or for that matter with white Americans living in flyover country. Truth be told, many probably feel more kinship with their nations of origin than with many of their fellow countrymen.
Yet we’ve sort of accepted that Faustian bargain given the enormous contributions that Asian immigrants have made to STEM in America. Certainly our political and pundit classes love pushing for immigration from places like India, China or South Korea, while almost never mentioning the Black or Hispanic populations in this country as potential sources of human capital. Despite their glib assertions of politically correct orthodoxy, what does this suggest about what the intellectual class in this country really believes when it comes to race?
Given the rise of places like Taiwan or South Korea in past decades and the rise of China today, it’s not even clear that the gambit to import elite Asian immigrant labor is likely to succeed long term as far as ensuring American technological preeminence. For instance, around 90% of semiconductor and EV battery manufacturing takes place in East Asia today. I wonder if you believe that America’s penchant for importing elite immigration is still worth the social price this country pays in terms of creating such a culturally and ethnically disaggregated population.
With the cost of labor wages and benefits in this country, deindustrialization would hardly seem to have been preventable. They used to say GM was a health insurance company that assembled some cars - that's not sustainable in an industry that has competitors that don't have to play by those same rules, and we know what happened to GM.
I had a manufacturing facility in Compton and Watts California for over 50 years. Hispanic to black requests for employment applications ran about 200 to 1.
That is where I learned that you could graduate from the local high school without learning to read. We had about 5 white applicants. They were either hopeless alcoholics or were accompanied by a probation officer. We did hire 2 Asians. One came from Nellis School for Boys in Whittier. (Local reform school)
His first day at Nellis he met with a counselor, who was also Japanese. The counselor told him if he didn't straighten up he would kill him, rather than let his disgrace race. Seem to work.
Holy cow, this was insightful.
You overlook trade policy as a factor, or, perhaps you buried it under Government Policies. The deindustrialization was heavily influenced by the flood of cheaper, substitute, products we imported from the Far East. American manufacturers have been under tremendous pressure to produce goods at low prices since imports were able to undercut them. The only way to do that was to utilize cheap foreign labor to do so. Then, of course, as expected, those foreign manufacturers have been the primary source of innovation for those aging, but necessary products.
I will also agree that immigration has had a profound effect. Not only do the immigrants take the jobs that still exist in US manufacturing, but they tend to suppress wage growth due to the supply of labor. Personally, I’ve been amazed at how many Vietnamese, Cambodian, and Chinese families have come, one after another, through chain migration, to the factory where I used to work.
One last point. The unnecessary and counterproductive emphasis the US has placed on college education has distracted the Black population, especially those with lower income, from obtaining more valuable skills in the trades. Thanks to college practices of charging higher income families to pay, not only for their own kids, but also for the tuition of low income students (through obscenely high tuition), many Black families are romanced into the idea of a free (or very low cost) college education for their kids. It would be interesting to study the success of Black students engaged in the trades (after brief training, post high school, or even during high school), relative to those who go into the college ranks, only to drop out before graduation.
I always find anything Mr. Roscoe writes to be thoughtful and well-researched. It is hard to argue with his data; the multiplier effects seem impressive in their inexorability. I have always thought that the lack of well-paying jobs for those with a modest education was problematic after the brief period of halcyon days following World War II. But I have heard some refer to this group., both black and white as essentially an artificial middle class whose days were numbered from early on. Are there any policy recommendations or approaches that we can take from all this that might have the effect of making things better? College for all is a pipedream and when everyone is "college-ready," what we will see will be little more than the thirteenth grade. I do not see any obvious way out of this.
I have spent more decades than I like to record in business and policy consulting, and believe you and I met when Professor Loury and I were relatively young economists at a symposium on natural gas regulation in the 1980s. For my sins in making a career of calculating the impacts of government regulation, I have had to deal with oversimplified multiplier calculations far too often. Regrettably, that is also what I find here. First, Mr. Roscoe’s numbers fail to account for the percentage of the African-American population holding manufacturing jobs before and after deindustrialization. Without that, his contribution might shed light on effects of deindustrialization in general but not its differential effects on any particular group. Second, using multipliers as he does for an economy-wide issue like deindustrialization is a fundamental error. It fails to take into account the fact, pace the first comment, that over time the total workforce does shift from one occupation and industry to another. It is simply false that “indirect” jobs supported by US workers were cut in half or more over the period of deindustrialization, which is what his multiplier stories seem to imply. If every disastrous effect on unemployment forecasted by multiplier analysis since it came in vogue had been accurate, the only people working today would be those doing the studies.
Studies done with valid analytical methods show that deindustrialization could lead to fewer workers being employed, but far less than Mr. Roscoe’s naive multiplier analysis implies. Applying even the simplest of applied general equilibrium models -- which have become the standard in both consulting and government agencies -- to do this analysis also makes it possible to think about how to differentiate impacts on different demographic groups. For a reasonably straightforward explanation of the reason analysts have adopted the general equilibrium approach, I suggest a report done by the Science Advisory Board for the EPA on use of economic models: https://www.epa.gov/system/files/documents/2023-02/EPA-SAB-17-012_1.pdf, to which I confess to being a contributor. See in particular p. 49 which points out the failing of multiplier-type models to take into account overall resource (i.e. labor) supply.
Even if the statistics given 'prove' that deindustrialization is the most important factor explaining Black poverty, I'd say, 'So what?' Because I don't see anything that can be done about it, and my life experience tells me that politicians will execute/install policies that will most probably not work. Even probably make matters worse; see, 'The Myth of American Inequality' by Gramm, Ekelund and Early for the details.
But, in fact, people (including Black people) have moved from one state to another when they heard about better opportunities elsewhere. The northern factory workers, many of them, came from poorer, rural, southern states. They weren't born as factory workers. They learned how to be productive in those industries. Which is the kind of adaptation to circumstances that seems to be missing now.