Archive for the ‘manufacturing’ category

How Much Should We Pay to Save a Steel Mill Job?

November 16, 2018

There are about 86,000 steel mill jobs in the United States, down from a decade ago when it was about 100,000. At its nadir in early 2017, steel mill jobs were under 81,000. About 6,000 jobs have come back since tariffs were introduced, but the producer price index (PPI) for steel mill products also soared as a result. The value of U.S. steel mill output was about $78 billion before tariffs while the producer price index for steel mill products has risen just over 20% since tariffs . Those numbers imply a cost of tariffs to purchasers of U.S. steel mill products (U.S. companies and governments) of about $16 billion, as well as a cost per job saved of about $2.7 million. If instead of tariffs the U.S. had offered each of the 6,000 laid-off steel mill workers a generous $100,000 stipend per year for 3 years to replace lost pay and benefits and to retrain, it would have cost $1.8 billion, saving U.S. companies and governments $14.2 billion in tariff-related costs. A  less than 1% surcharge on imported and U.S. steel mill products could have paid for such a policy without adding to government debt. I’m not arguing for such a policy but that 1% seems like a small price to pay to avoid punishing 20% price hikes.

Steel Prices and Emp

Protectionist Fallacies and Promises

October 11, 2018

Repetez moi: “tariffs are stupid.” Our President, who should know better, said the U.S. has collected billions of dollars from China as a result of the tariffs placed on imported goods. Well no, not exactly, actually not even close. Those billions of dollars have been collected from U.S. companies and manufacturers importing products and materials (like aluminum and steel, electronics, etc.) for use in the products and services that they sell. Tariffs have already cost Ford Motor Co. $1 billion in profit. U.S. consumers are also paying, until recently only on a few products (the CPI for laundry equipment was falling for about 10 years but is up 13% over the past year) but who will soon see prices on more products affected, as tariffs are placed on more products. Auto workers who were promised protectionist policies would spur manufacturing job growth must be disappointed as growth has fallen since 2017 and has been negative since mid-2017. Obviously, there are other influences on emp. growth in autos but protectionism isn’t helping. NAFTA version 2 (which looks a lot like NAFTA version 1) is hailed as the next savior for employment. Why not, those protectionist promises have worked-out so well thus far.

auto manuf emp

Manufacturing’s Toughest Sell

October 12, 2012

The percentage of younger workers in the workforce is declining in NH, as it is across the country, but the trends are different for specific industries and occupations (more about that in a later post).  Simply put, some industries are capturing a larger share of a smaller cohort of younger workers and the key for any industry or occupation is to have appeal for younger workers and students.  How does an industry capture more younger workers?   Is it because the industry is perceived as being desirable or “cool,” or do younger workers respond to signals about the opportunities in an industry or an occupation?

Manufacturing is one industry that has been capturing a smaller share of younger workers (government and utilities are others).   The chart below shows that over the past 15 years the share of younger workers (age 25-34) declined in NH’s workforce (age 25-64).  But the chart also shows that the drop was more pronounced in manufacturing than in the workforce overall.

Government employment hasn’t been perceived as cool for some time but job opportunities have grown or remained steady (except in very recent years) over the years suggesting that “coolness” is a factor in the career choices of younger workers.  For manufacturing it is likely to be a combination o cool and opportunities.  While manufacturers now have good opportunities for young workers, that perception must overcome  decade s of    labor market signals showing large declines in manufacturing employment.  The decline in younger workers in manufacturing roughly corresponds to the change in manufacturing employment in the state (chart below).

Manufacturing employers are in a difficult position.  Fewer households have workers with a history of manufacturing employment, limiting the legacy effects that can contribute to career choices.  A “twist”  (changing occupational makeup) in the manufacturing labor market mean that much of the public and almost no  high school guidance personnel have an understanding of the types of jobs in manufacturing. A general lack of “coolness,” perceived lack of opportunities, and  limited understanding of the opportunities that exist in the industry all mean that manufacturing will have a tough time capturing a larger share of the younger workforce, but it is important to do so for a number of reasons. I just don’t know if manufacturers can do it alone.


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